However, the void left by China’s ban was quickly filled by Mexican drug cartels, who saw it as an opportunity to make substantial profits. The cartels started producing their own fentanyl using chemical ingredients imported from China, known as precursors.
Blockchain analysis firm Elliptic identified in a report on May 23 over 90 Chinese chemical companies that took part in supplying the precursors, offering cryptocurrency. as a primary payment method.
“Our researchers received offers to supply large quantities of one particular fentanyl precursor. This chemical is not used in the manufacture of any other products, and is a controlled substance in most countries. However, it remains unregulated in China.“– the Elliptic report says.
90% of precursor suppliers provided crypto wallet addresses for payment
“They always use USDT or Bitcoin to pay. It is no problem.”– the suppliers told Elliptic researchers.
In addition, 90% of China-based chemical manufacturers that agreed to supply the fentanyl ingredients to Elliptic offered a crypto wallet address to receive the payment. According to the analysis provider, Bitcoin (BTC) was the most popular means of payment by some distance, followed by Tether’s (USDT).
Finally, the research found that these crypto wallets received thousands of payments, with a total amount of more than $27 million, soaring 450% year-over-year.