Millions in Bitcoin paid to Chinese firms for fentanyl precursor

Millions in Bitcoin paid to Chinese firms for fentanyl precursor


Mexican drug cartels are using cryptocurrency to pay Chinese chemical companies for the precursor ingredients used in their production of fentanyl, with over 90% of these suppliers offering crypto wallets as a payment method, according to a report by blockchain analysis firm Elliptic.

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. 

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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. 

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Source

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