Elliptic, a research report published Tuesday, found that Chinese companies selling chemicals used to manufacture Fentanyl accept payment in Bitcoin and Tether.
Blockchain analytics company specializes in regulatory compliance and risk management. The firm said that the overwhelming majority of Chinese pharmaceutical chemical companies, which can ship fentanyl precursors overseas, accept cryptocurrency as payment.
Elliptic discovered that the majority of chemical suppliers identified by the company used accounts at “three specific exchanges” based outside China. These were not named in the report. The analytics company said that it had informed the exchanges used by China-based suppliers of drugs, and highlighted hundreds of wallets which had received more than $27 million in crypto assets.
Elliptic has not responded to requests for comment immediately.
Fentanyl is a synthetic opioid which is cheap to make and much more potent than Heroin. It has been linked with thousands of drug overdoses in the United States every year.
According to the National Institutes of Health, in 2021, of more than 106,000 drug-related overdoses that occurred in the United States, synthetic opioids accounted for around 70,600 of them.
Elliptic reported that fentanyl overdoses were the number one cause of death for Americans between 18 and 45 years.
The analytics company identified over 80 Chinese firms who offered to ship fentanyl-precursors overseas in exchange for cryptocurrency. Elliptic was told by a supplier that cryptocurrency is a popular method of payment among their customers in Mexico.
The supplier told Elliptic that they always pay with USDT or bitcoin. He referred to the stablecoin, Tether, by its ticker. It is not a problem.
Elliptic’s team of researchers found multiple suppliers who claimed to have shipped fentanyl and its precursors to Mexico. Drug cartels in Mexico can then traffic this drug into the U.S.
It may surprise analysts to learn that Chinese-based companies are using crypto exchange accounts. As part of its crypto crackdown, China will restrict residents’ access in 2019 to international exchanges.
The White House also released a report that linked fentanyl trafficking with cryptocurrencies, including Bitcoin, Ethereum and the so-called “privacy coin” that has become popular on dark-web marketplaces.
The report of the Trump administration claimed that cryptocurrency is the ‘predominant financing mechanism associated with fentanyl drug trafficking’
