Fentanyl overdoses have resurfaced as the leading cause of death between individuals aged 18 to 45 in the United States, with China once serving as the primary source of this synthetic opioid. On the other hand, in 2019, under mounting pressure from the United States, the Chinese Government took decisive action by implementing strict regulations that effectively banned the export of this fentanyl.
Nonetheless, the void left by China’s ban was quickly filled by Mexican drug cartels, who saw it as a chance to make substantial profits. The cartels started producing their own fentanyl using chemical ingredients imported from China, known as precursors.
Blockchain Tech analysis company Elliptic identified in a report on May 23 over 90 Chinese chemical corporations that took part in supplying the precursors, offering digital currency as a primary payment method.
“Our researchers received offers to supply large quantities of one particular fentanyl precursor. This chemical is not used in the manufacture of any other products, and is a controlled substance in most countries. Nonetheless, it remains unregulated in China.“
– the Elliptic report says.
90 percent of precursor suppliers provided cryptocurrency wallet addresses for payment
Further in the report, Elliptic stated that during the negotiations, the suppliers raised no concerns about how the precursors would be used after the sale, with some of them even praising them as the best-selling product that can be used to produce fentanyl.
Other suppliers likewise talked about how they sold the opioid to customers from Mexico. The researchers requested the suppliers whether Mexico-based buyers paid in cryptocurrency, to which one responded:
“They always use USDT or Bitcoin (BTC) to pay. It is no problem.”
– the suppliers informed Elliptic researchers.
Additionally, 90 percent of China-based chemical manufacturers that agreed to supply the fentanyl ingredients to Elliptic offered a cryptocurrency wallet address to receive the payment. Reports by the analysis provider, Bitcoin (BTC) was the most trending means of payment by some distance, followed by Tether’s (USDT) (USDT).
In the end, the research found that these cryptocurrency wallets received thousands of payments, with a total amount of greater than $27 Million, soaring 450 percent year-over-year.