Fentanyl is a synthetic opioid that is 50 to 100 times more potent than morphine and has been linked to thousands of overdose deaths in the US and other countries. But where does this deadly drug come from, and how is it paid for?
According to a new report by Elliptic, a blockchain analytics firm, most of the fentanyl sold in the US is manufactured with ingredients supplied by Chinese chemical companies that accept payments in cryptocurrencies, such as Bitcoin and Tether.
The report found that more than 90 Chinese companies advertised fentanyl precursors on the open web, and 90% of them offered to accept cryptocurrency as payment. Elliptic traced the cryptocurrency addresses shared by these companies and estimated that they received over $27 million in transactions in the past five years, most of which occurred since 2021.
The report also revealed that these companies mostly accepted Bitcoin and Tether as payment methods, accounting for 66% and 34% of the transactions, respectively. Tether is a stablecoin that is pegged to the US dollar and is widely used in crypto markets.
Transacting in Crypto Has Its Benefits
Elliptic said that the use of cryptocurrency by fentanyl suppliers has several advantages for them.
First, it allows them to avoid banking regulations and sanctions that could limit their access to the global financial system.
Second, it enables them to reach a broader customer base, especially in countries where fentanyl is illegal or controlled.
Third, it gives them some degree of anonymity and privacy, although not complete, as blockchain transactions are still traceable and transparent.
But Fentanyl is Still Very Dangerous
However, Elliptic also warned that the use of cryptocurrency by fentanyl suppliers poses significant risks for public health and safety, as well as for the integrity of the crypto industry. The report said that the amount of cryptocurrency received by these companies could potentially buy enough fentanyl precursors to produce pills with a street value of $54 billion, which could cause millions of overdoses.
Elliptic also said it has shared its findings with law enforcement agencies and crypto exchanges to help them identify and stop the illicit activity. The report urged crypto exchanges to implement robust compliance measures and due diligence procedures to prevent their platforms from being used by fentanyl suppliers.
The report also called for more international cooperation and coordination among governments, regulators, law enforcement agencies, and crypto industry players to combat the fentanyl trade and its financing through cryptocurrencies.
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