According to a recent study by Elliptic, a blockchain analytics and cryptocurrency compliance solutions firm, over 90 Chinese businesses have been identified as supplying fentanyl precursors to the United States. Intriguingly, over 90% of these companies facilitate cryptocurrency transactions.
Elliptic’s report delineates a comprehensive account of how cryptocurrencies are aiding in exacerbating the fentanyl epidemic in the U.S. The firm’s findings revealed that Chinese businesses, apart from peddling fentanyl precursors, are also the beneficiaries of vast crypto payments, amounting to tens of millions of dollars, in return for supplying the synthetic drug to the U.S.
Cryptocurrency: The New Modus Operandi for Fentanyl Precursor Suppliers
Elliptic’s research postulates that the lion’s share of fentanyl smuggled into the United States employs precursors sourced from Chinese suppliers. Elliptic’s researchers found themselves privy to offers from more than 90 Chinese businesses keen on supplying these precursors, most of whom agreed to transact via crypto. These companies have also extended their supply chain to include Mexico.
A meticulous investigation into the crypto wallets employed by these businesses exposed a staggering fact – they had received payments to the tune of more than $27 million. Moreover, transaction volumes have skyrocketed, recording a 450% increase year-over-year.
While this $27 million figure seems minuscule in contrast to the billions reportedly raked in by the Chinese fentanyl export market, it nevertheless presents a grim picture of this burgeoning trade.
Policy Response to the Fentanyl Crisis
China, the primary purveyor of fentanyl for several years, imposed a ban on the drug in 2019 after intensive diplomatic discussions with the U.S. Since then, the U.S. government has been diligently striving to curb the growth of the fentanyl market, taking several steps in this direction.
The U.S. Treasury, in its bid to combat the fentanyl crisis, sanctioned several individuals linked to this network. That includes two Dutch nationals and a Briton, allegedly supplying fentanyl and other drugs to online buyers.
A noteworthy point in this narrative involves crypto mixers, tools capable of masking the identities of cryptocurrency users. These have caught the attention of the Treasury, given their potential misuse by nefarious actors. The U.S. government has taken several measures to ensure these tools are not exploited for illicit purposes.
Cooperation Among International Authorities
The concerted efforts of the U.S. government to mitigate the fentanyl crisis are bolstered by international cooperation. Authorities recently made significant headway, arresting nearly 300 individuals implicated in a dark web fentanyl market and seizing $53 million in cash and crypto.
The dark web’s association with cryptocurrencies is well documented. Consequently, it is a significant concern for governments worldwide striving to forestall illicit crypto transactions. Thus, countering the dark web’s nefarious activities remains on their agenda.
The recent report from Elliptic sheds light on the complex interplay of cryptocurrencies and the global fentanyl crisis. While we cannot deny cryptocurrencies’ innovation and potential benefits, addressing and mitigating their misuse is equally crucial.
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