tl;dr
Blockchain analytics firm Chainalysis has found direct financial connections between Mexican drug cartels and Chinese fentanyl precursor suppliers through cryptocurrency transactions. The report reveals that despite China's ban on crypto, Chinese manufacturers remain the primary source of fentanyl p...
Blockchain analytics firm Chainalysis has uncovered direct financial connections between Mexican drug cartels and Chinese fentanyl precursor suppliers through crypto transactions. Despite China's ban on crypto, Chinese manufacturers remain the primary source of fentanyl precursors for Mexican cartels, who use alternative financial instruments such as crypto to evade capital controls. The cartels prioritize speed over security in their crypto transactions, primarily using centralized exchanges and unhosted wallets. Additionally, the report identifies various components of the crypto-enabled supply chain, including Chinese precursor manufacturers, postage services accepting crypto, and darknet markets facilitating transactions.
The report references past data showing that one group of suspected China-based chemical traders received over $37.8 million in crypto payments between 2018 and 2023. Crypto has become "increasingly interwoven into the illicit drug trade," Chainalysis researchers stated in their report on Wednesday analyzing the transactions. The "on-chain fentanyl trade" includes a "broad array" of players, Chainalysis claims. The connection was tracked primarily through a civil forfeiture case in Wisconsin that resulted in the seizure of $5.5 million in crypto, exposing how cartel-affiliated money launderers in the U.S. transferred funds directly to Chinese chemical manufacturers.
The operational pattern prioritized speed over security, making the transactions "straightforward but effective" while also rendering them more visible to investigators. Chainalysis further claims Mexican organizations, primarily the Sinaloa Cartel and Cartel Jalisco Nueva Generación, purchase these precursors to manufacture synthetic opioids, including fentanyl, for U.S. distribution. Law enforcement officials have identified multiple components in this crypto-enabled supply chain, including Chinese precursor manufacturers who openly advertise online, postage services accepting crypto, and darknet markets that facilitate transactions.