U.S. Opioid Crisis: Chinese Traders Use Cryptocurrency to Deal with Fentanyl Drug Painkiller: Elliptic Report
Majority of Chinese traders accept payment in virtual currency
Crypto asset (virtual currency) analysis company Elliptic released a report on the narcotic painkiller “Fentanyl” and virtual currency on the 23rd. He noted that many Chinese traders are receiving payments in the form of cryptocurrencies for fentanyl transactions.
Fentanyl is a powerful synthetic opioid used as an analgesic, but overdose as a narcotic has become a problem in the United States, and it is one of the leading causes of death among people aged 18 to 45 in the country. It is also pointed out as a profit source for international drug cartels.
Currently, drug cartels, primarily in Mexico, are believed to be using precursors of fentanyl purchased from Chinese operators to manufacture and distribute fentanyl to the United States.
This time, Elliptic’s research team contacted fentanyl-related businesses via e-mail and other means to conduct a survey. We have identified more than 90 Chinese companies that sell fentanyl precursors and accept cryptocurrencies as a payment method.
Some of the vendors have stated that their products “can be used to make fentanyl.” He also said that when he sold a precursor to a customer in Mexico, the counterparty paid him in USDT or Bitcoin (BTC), a US dollar-denominated stablecoin.
Source: Elliptic
According to Elliptic, 90% of these merchants provided a cryptocurrency wallet address for payment. It is a form of receiving payment in the form of Bitcoin and USDT. The number of cryptocurrency remittances to these merchants increased 450% year-on-year. The wallets of the merchants have received more than 3.7 billion yen ($27 million) so far.
What is a stablecoin
A cryptocurrency whose price is always stable. Stablecoins are a type of cryptocurrency, and unlike BTC, ETH, and XRP, which have volatility, their purpose is to maintain their value ($1) backed by the US dollar. In addition to US dollar-backed stablecoins (USDT/USDC), there are also stablecoins that use algorithms.
Cryptocurrency Glossary
Convert virtual currency to yuan
In China, the government is cracking down on cryptocurrencies, and even cryptocurrency exchanges are banned from operating. Exchanges based outside of China are also barred from serving Chinese residents.
Despite this, most of the Chinese merchants Elliptic surveyed had and used accounts on three exchanges based outside of China.
Elliptic notes that fentanyl traders may be using intermediaries to convert cryptocurrencies into yuan.
Elliptic has notified the three affected cryptocurrency exchanges of the use of fentanyl-related vendors. It has also red flagged hundreds of cryptocurrency addresses linked to fentanyl-related sales operations within its analytics tools.
U.S. Government Recognizes
The U.S. government is also aware of the use of cryptocurrencies in fentanyl-related transactions and is working on it. As of 2019, it was pointed out that online payments such as virtual currency were used in the distribution process of fentanyl.
connection: US White House “Virtual currency is being misused to buy and sell illegal drugs”
In April, the U.S. Treasury Department added a Chinese company to its economic sanctions list for supplying Mexican drug cartels with fentanyl precursors. It also sanctions the cryptocurrency wallets that these companies use to receive payments.
The same month, the White House also said it would ramp up efforts to crack down on the fentanyl supply chain.
“Drug traffickers are making cross-border deals with raw material suppliers and using technology to raise money,” it said. The Biden administration continued to work together across government agencies to prevent these criminals from accessing funds and materials.
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