Elliptic outlines fentanyl supply scheme paid in cryptocurrency

Chinese suppliers of the synthetic opioid fentanyl hold more than $32 million in crypto wallets, largely sourced from centralized exchanges, according to a report by Elliptic.

Analysts say more than 100 dealers in China offer to acquire precursors for making the drug and tablet presses in exchange for digital assets.

Some traders offered Elliptic’s experts the chance to buy fentanyl.

«From a sample of 141 potential suppliers from China and India, 100 expressed willingness to supply fentanyl precursors and tablet presses to our researchers, accepting cryptocurrency as payment. All 100 suppliers were Chinese», Elliptic noted.

U.S. Senator Elizabeth Warren drew attention to the issue in June. She said criminals have facilitated the sale of prohibited substances worth more than $540 million using digital assets.

«Cryptocurrency helps finance fentanyl trafficking, and we have an opportunity to stop it», Warren said.

According to the report, companies with accounts on major exchanges outside China often act as intermediaries between buyers and suppliers.

Primarily drug traffickers use Bitcoin and the stablecoin Tether as payment for goods, experts noted.

Analysts note that most illegal shipments from China are sent not to the United States but to Mexico and Germany.

Dealers have established trading schemes, and some even run their own marketplaces.

Sometimes Chinese suppliers advertise drugs on SoundCloud and social networks such as Facebook, TikTok, Twitter and Instagram.

The company also noted that traders have supply channels worldwide, including in CIS countries. In Russia, dealers are using new darknet marketplaces that emerged after the Hydra servers’ closure.

In October 2022, a U.S. resident was charged with laundering more than $5.3 million in proceeds from illegal drug trafficking.

In 2023, the U.S. government began selling Bitcoin seized from the Silk Road darknet marketplace. In March, authorities exchanged 9,861 BTC for $215 million, and in Julymoved 9,824 BTC (~$300 million at the time of transfer).