Chinese companies selling the chemicals required for producing Fentanyl, a synthetic opioid linked to thousands of drug overdose deaths in the United States, are reportedly accepting payment in cryptocurrencies like Bitcoin and Tether. This information comes from an investigative research report published by Elliptic, a blockchain analytics firm specializing in risk management and regulatory compliance.
According to the report, a majority of pharmaceutical chemical firms in China able to ship Fentanyl precursors overseas accept cryptocurrencies as payment. These chemical suppliers mostly use accounts at “three specific exchanges” based outside of China, which remain unnamed in the report. Elliptic stated that the exchanges used by these China-based drug suppliers have been notified and that the firm highlighted hundreds of wallets that had received over $27 million in crypto assets.
Fentanyl is an opioid that is cheap to manufacture and far more potent than heroin, making it a major contributor to drug overdose deaths in the U.S. In 2021 alone, synthetic opioids were involved in around 70,600 of the over 106,000 drug overdose deaths in the country, as per research from the National Institutes of Health. Fentanyl overdoses are also the leading cause of death among Americans aged 18 to 45 years old.
The report by Elliptic identified more than 80 China-based companies that offered to send Fentanyl precursors abroad in exchange for cryptocurrencies. One supplier mentioned that cryptocurrency was a popular payment method amongst its Mexico-based customers, stating, “They always use USDT or Bitcoin to pay… It is no problem.” Multiple suppliers also confirmed shipping fentanyl precursors and the drug itself to Mexico, where drug cartels can traffic them into the U.S.
The fact that China-based firms are leveraging crypto exchange accounts might seem surprising, especially considering China’s 2019 announcement to restrict residents’ access to international exchanges amidst the country’s crypto crackdown. However, the relationship between cryptocurrencies and Fentanyl has been recognized before – in 2019, the White House released a report linking Fentanyl trafficking with cryptocurrencies like Bitcoin, Ethereum, and the privacy-focused Monero.
In conclusion, the use of cryptocurrencies as a payment method for Fentanyl production chemicals highlights concerns over the potential misuse of digital currencies when dealing with illicit substances. Although Chinese firms are using offshore exchanges for their transactions, it raises questions around the effectiveness of regulatory efforts to address the role of cryptocurrencies in drug trafficking and overdose deaths.