Yesterday, Elliptic Ltd., a London-based firm specializing in blockchain analytics, published a new report on cryptocurrency payments received by Chinese manufacturers of fentanyl, a synthetic opioid one hundred times more potent than oxycodone.
According to the research conducted by Elliptic, more than ninety chemical companies in China supply customers abroad, particularly Mexican drug cartels, with fentanyl precursors. For their service, Chinese chemical laboratories get paid in cryptocurrency, mainly Bitcoin and the US dollar-backed stablecoin Tether.
Tracking cryptocurrency addresses allowed Elliptic to identify the manufacturers of the precursors used in the chemical reactions to produce fentanyl. The investigation revealed cryptocurrency transactions worth more than $27 million. The research team also discovered a 450% annual growth in the number of transactions. Even more astonishing is the total street value of fentanyl which could have been manufactured from Chinese chemical compounds. Elliptic estimates that the value could be as high as $54 billion.
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So far, it is difficult to determine the reason for the increase in transactions. It could be a sign of the boost in the export of fentanyl precursors, but also an indication of the spread of cryptocurrency as a means of payment. Interestingly, the rise in illicit crypto transactions has occurred despite China’s anti-crypto stance. While cryptocurrency exchanges are banned from operating in the country, they are also not allowed to serve Chinese residents outside the country. Elliptic emphasized that all transactions were conducted through three foreign exchanges, but did not name them in its report.
Elliptic also wrote about its correspondence with some of the chemical manufacturers from China, "The suppliers showed no concerns about how the chemical would be used, with some explaining that it was their best-selling product and could be used to produce fentanyl. Others pointedly mentioned that they had sold it to customers in Mexico."
"Seventeen of the businesses even offered to provide fentanyl itself – despite the Chinese government ban. Others offered to provide other synthetic opioids even more potent than fentanyl, but that are currently legal to produce and sell in China," Elliptic added.
While the US government is actively fighting against recreational drugs, it is also warning about the danger of counterfeit fentanyl-based prescription opioids. According to Juan Antonio Gonzalez, the US attorney for the Southern District of Florida, there is "a terrifying rise in the prevalence of counterfeit prescription pills being sold on the street and online. The public must be aware that while these pills may look like prescription drugs, they likely contain the powerful synthetic opioid fentanyl."
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Gonzalez stated in his 2021 article that "a lethal dosage of fentanyl is just two milligrams, equivalent in size to a few grains of salt, as compared to a lethal dose of heroin at 30 milligrams, and that’s why communities everywhere have tragically experienced more fatal overdoses," while Elliptic claims that "fentanyl overdoses are now the leading cause of death for those aged 18-45 in the United States."