Chinese chemical producers are accepting cryptocurrency as payment for fentanyl ingredients they're selling to drug operations that mass-produce the narcotic in countries around the world—and they're not offering it on the dark web, in full public view.
Despite that trend away from dark-web fentanyl sales, four members of the US Congress this week reintroduced a bill called theto increase the sentences for dark-web drug dealers, focusing specifically on fentanyl.
Those Chinese chemical companies do in some cases sell products other than fentanyl precursors, Elliptic’s Robinson notes, and he concedes that blockchain analysis can’t tell the difference between those sales and the sales of fentanyl ingredients. Some also sold precursors to amphetamines, methamphetamines, and other opioids. But Elliptic’s researchers saw companies advertising that fentanyl precursors were their best-selling product, in some cases.
The US government may be increasingly aware of the activity of fentanyl precursor sellers in China and of cryptocurrency’s role, but so far the US has acted on a scale far smaller than the industry Elliptic has uncovered. The US Treasury Department last monthagainst four Chinese men and two chemical labs, Wuhan Shuokang Biological Technology and Suzhou Xiaoli Pharmatech, for selling fentanyl precursors to drug cartels in Mexico. Three of the men were also indicted in absentia.
The Chinese chemical firms’ decision to accept cryptocurrency for their fentanyl ingredient sales may seem counterintuitive, given the ability of companies like Elliptic and other cryptocurrency-tracing firms to track sales of dangerous and potentially illegal products across blockchains.
But traceability also creates an opportunity to pressure cryptocurrency exchanges to cut off the accounts of fentanyl precursor sellers Elliptic has identified. Elliptic, in fact, notified exchanges of hundreds of addresses it linked to the Chinese chemical companies. “There’s definitely a role for those services to clamp down on this,” Robinson says.
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