#cryptocurrency #blockchain #China #fentanylcrisis #Bitcoin #TRON #Ethereum #financialcrime
In a recent study by blockchain intelligence firm TRM Labs, a startling rise in cryptocurrency transactions linked to Chinese drug precursor manufacturers was reported. Cryptocurrency deposits into addresses connected to these manufacturers more than doubled in the first four months of 2024 when compared to the same timeframe in 2023. The year 2023 saw these networks receiving over $26 million in cryptocurrency, showcasing a significant preference for digital currency payments among the over 120 manufacturers examined. Notably, Bitcoin emerged as the go-to cryptocurrency, accounting for about 60% of the total transaction volume, followed by payments on the TRON blockchain and Ethereum.
The TRM Labs report uncovers a staggering 600% increase in the volume of cryptocurrency deposited into wallets associated with these Chinese precursor manufacturers from 2022 to 2023. Such an uptick highlights the growing adoption of cryptocurrencies as a payment method for illicit trade. Among the digital currencies, Bitcoin reigns supreme in these transactions, while TRON and Ethereum also see significant use. The findings stress that 11 manufacturers are responsible for more than 70% of the crypto-denominated sales of drug precursors, with most transactions originating from unhosted wallets, cryptocurrency exchanges, and payment services. This adoption of digital currency payments goes hand in hand with traditional payment methods, including PayPal and bank transfers, reinforcing the hybrid nature of these illicit financial operations.
The report also sheds light on the broader issue of China’s involvement in the global drug precursor market, particularly its significant role in the U.S. fentanyl crisis. A damning report from a U.S. congressional committee points to China as the source of over 97% of the precursors used in the illicit fentanyl trade while accusing the country of subsidizing the production of these substances. Such subsidies are seen as a direct contribution to the opioid epidemic plagitating the United States. Moreover, the committee’s findings reveal China’s strategy of incentivizing the manufacture of these harmful substances for sale outside its borders. This disturbing trend underscores the complex challenge of combating the global drug epidemic, further complicated by the integration of cryptocurrencies into the financial mechanisms of illicit trade.
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