The report shows that over 90 Chinese companies are supplying precursor chemicals for fentanyl production, and a staggering 90% of these companies accept cryptocurrency as payment.
Elliptic's research found that a significant amount of fentanyl entering the U.S. is made using precursors imported from Chinese suppliers. They received offers from more than 90 Chinese companies to provide these precursors, and the majority of them accepted cryptocurrencies as a form of payment. These companies have been shipping the precursors to Mexico as well.
Upon analyzing the cryptocurrency wallets linked to these Chinese companies, Elliptic determined that they had received a cumulative payment of more than $27 million.The number of transactions has increased by 450% compared to the previous year. However, it's important to note that this amount is relatively small compared to the overall value of the Chinese fentanyl export market, which is estimated to be in the billions of dollars.
China previously served as the main source of fentanyl but banned the drug in 2019 following negotiations with the U.S. government. Despite the ban, Chinese businesses continue to find ways to supply precursors to the U.S. The U.S. government has been actively working to combat the fentanyl crisis and has implemented various measures to prevent its expansion.
The U.S. Treasury Department has also taken action by imposing sanctions on individuals associated with the fentanyl network. Recently, two Dutch nationals and a Briton were sanctioned for their alleged involvement in supplying fentanyl and other drugs to online buyers. The Treasury Department has been particularly vigilant in targeting criminals who exploit cryptocurrencies for illegal activities. They are particularly concerned about the use of crypto mixers, which allow individuals to hide their identities.
To address the fentanyl crisis, the U.S. government has been cooperating with international authorities. In early May, a significant operation led to the arrest of nearly 300 individuals involved in a dark web fentanyl market. Law enforcement authorities seized $53 million in cash and cryptocurrency during the operation. The dark web has often been associated with cryptocurrency transactions, and governments worldwide are actively working to prevent illicit activities that utilize crypto, especially on the dark web.
In conclusion, the Elliptic report reveals that cryptocurrency is playing a significant role in sustaining the fentanyl crisis in the United States. Chinese companies are supplying precursors for fentanyl production and accepting crypto payments. The U.S. government is taking various steps, including sanctions and law enforcement operations, to combat the crisis. Efforts are also being made to prevent the use of cryptocurrency for illegal transactions, particularly on the dark web. Combating the fentanyl crisis remains a top priority for authorities both domestically and internationally.
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