As countries like India struggle with the growing menace of drugs, crypto has emerged as a culprit as two separate reports by Blockchain research firms have revealed that Chinese chemicals companies, suspected of supplying the base substances to produce fentanyl to overseas drug cartels, have earned tens of millions of dollars in cryptocurrencies.
Most fentanyl trafficked into the US is manufactured using precursors imported from Chinese suppliers, according to researchers from London-based Blockchain analytics firm Elliptic.
Elliptic's analysis showed that the cryptocurrency wallets used by these Chinese companies have received thousands of payments, totaling just over $27 million, and that the number of transactions has increased by 450 per cent year-on-year.
"About $27 million would purchase enough precursors to produce fentanyl pills with a street value of approximately $54 billion," the report warned.
This amount of fentanyl would technically be sufficient to cause 8.6 billion people to suffer a fatal overdose from the drug.
Cheaper to produce than heroin and 50 times more potent, this synthetic opioid has fuelled an epidemic over the past decade, as well as becoming a huge source of profits for international drug cartels.
Crypto industry wants 0.1% TDS, Sebi-like regulator in Budget 2023
Are the rising Covid-19 cases in China a worry for India?
Signature Bank pulls back from crypto transactions below $100,000: Binance
Crypto firms go out of business as cryptocurrency collapse continues
Banning cryptocurrency should be an option: IMF's Kristalina Georgieva
Chinese commerce minister to hold talks in US amid disputes over tariffs
Alibaba refutes layoff rumours, says will hire 15,000 people this year
Imran Khan says 'undeclared martial law' in Pakistan; files plea in SC
Immigration to Britain reaches record high in 2022 due to war, economy
US weekly jobless claims rise moderately; Q1 GDP growth revised up
Elliptic researchers received offers from more than 90 China-based companies to supply fentanyl precursors, 90 per cent of which accepted cryptocurrency payments. Many mentioned that they have shipped the same chemicals to Mexico.
"Many of these businesses were also willing to supply fentanyl itself, despite this being banned in China since 2019," the report noted.
In a separate report, Blockchain research firm Chainalysis said crypto addresses associated with China-based sellers of precursor chemicals used to make fentanyl received more than $37.8 million worth of cryptocurrency since 2018.
For many years, China was the main source of illicit fentanyl. But in 2019, following intense diplomatic pressure from the US, the Chinese government regulated the drug - effectively banning its export.
"However, far from stemming the tide, illicit fentanyl imports into the US have soared. That's because Mexican drug cartels have stepped in to fill the void and seize the market - manufacturing their own fentanyl using precursors (chemical ingredients) imported from China," the Elliptic report revealed.
The US government has placed increasing emphasis on disrupting the financial activity of fentanyl traffickers and their supply networks.
In a fact sheet published on April 11, the White House indicated that it intends to "expand its efforts to disrupt the illicit financial activities that fund these criminals by increasing accountability measures, including financial sanctions".
On April 14, the US Department of the Treasury sanctioned several individuals and businesses in China for supplying precursor chemicals to drug cartels in Mexico for the production of fentanyl intended for the US market. The sanctions also listed cryptocurrency wallets used by these businesses to receive payments.
"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. However, it remains unregulated in China," said the Elliptic team.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)