Alleged Suppliers of Fentanyl Chemicals Received $38 Million in Crypto – Chainalysis
Suspected sellers of chemicals used to make the deadly drug fentanyl have received tens of millions of dollars worth of cryptocurrency since 2018, according to blockchain analytics firm Chainalysis.
Regulators around the world have warned that crypto assets are being used to fund illegal activities. Crypto transactions related to illicit activities hit a record high of $20 billion in 2022, Chainalysis reported in January. In a report on Wednesday, Chainalysis said people involved in illegal fentanyl-related transactions typically use the cryptocurrency because of its “near-instantaneous, cross-border, and pseudonymous characteristics.”
It said it has identified “dozens” of cryptocurrency wallet addresses that have similar activity patterns to four addresses already identified by authorities as belonging to Chinese chemical stores. Together, these addresses have received more than $37.8 million worth of cryptocurrency since 2018, Chainalysis said, adding that the true total volume of cryptocurrency is “likely much higher.”
“Many drug traffickers use cryptography to try to evade law enforcement, facilitating the ongoing opioid epidemic in the United States and other drug crises around the world,” said said Chainalysis.
The report echoes the findings of blockchain researcher Elliptic, who on Tuesday said he found 90 China-based companies willing to sell fentanyl precursor chemicals, 90% of which accept cryptocurrency payments. Crypto wallet addresses provided by these vendors received $27 million in cryptocurrency payouts, mostly in bitcoin or stablecoin Tether, Elliptic said.
Fentanyl, a synthetic opioid 50 times more potent than heroin, has become a major black-market narcotic in the United States, killing nearly 200 Americans a day. China has said there is no illegal trafficking of fentanyl between China and Mexico. The United States believes that Chinese traffickers have shifted from manufacturing finished fentanyl to exporting mostly precursor chemicals to Mexican cartels, which manufacture and deliver the final product.
Chainalysis said crypto transaction volume to Chinese chemical stores “positively correlates” with fentanyl-related drug seizures at the US-Mexico border. Chainalysis noted that chemical stores sell “more than just precursor chemicals to fentanyl,” so some of the payment streams it identified might not be drug-related.
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