The US has accused two China-based pharmaceutical firms of using crypto to sell fentanyl precursor chemicals to violent Mexican cartels distributing drugs across the US.
Six defendants and two pharmaceutical firms, Shandong Believe Chemical Company and Shandong Ranhang Biotechnology Ltd, were indicted by an Ohio district court grand jury yesterday and charged with money laundering, international criminal financing, and terrorist financing.
The firms allegedly presented themselves as legitimate pharmaceutical companies while marketing and selling various chemical products that are required in the production of fentanyl.
It’s alleged that drug traffickers accepted crypto as payment, and would send the funds to crypto wallets under the control of the accused entities and persons.
Crypto under the control of the two firms would then be sent to agents, who would hold onto the funds until they could be converted into fiat currency and laundered through international banks.
As part of the indictment, a sum of crypto from a Binance account with $26,000 worth of funds will be forfeited if the US manages to secure a conviction.
The Shandong Believe Chemical Company website claims it’s a “high-tech enterprise integrating medicine, chemical technology research and development and pharmaceutical intermediates.”
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The alleged buyer of these specific precursors is the Gulf Cartel (Cartel del Golfo). It’s one of Mexico’s oldest criminal organizations, dating back to the 1930s, and was designated a terrorist organization last year.
The US claims the cartel deals in drug trafficking, kidnapping, extortion, human smuggling, and “employs violence, including assassinations of civilians and government officials, to intimidate the public and control territory.”
US and China collaborated to achieve the fentanyl indictment
FBI director Kash Patel said yesterday’s indictment was the result of a “historic” collaborative investigation between the US and China’s Ministry of Public Security.
He implied the indictments were helped by the FBI and Donald Trump visiting China last November, as Patel claimed the president’s negotiations with President Xi, “continues to pay dividends for America’s national security in the war on deadly narcotics.”
Read more: Crypto payments to China chemical suppliers fuel US fentanyl epidemic
Crypto analysis firm Elliptic has previously found that centralised crypto exchanges in Russia and Australia have been used to facilitate millions of dollars worth of funds that stem from China-based sellers of fentanyl precursors.
It was able to trace $32 million worth of crypto, made up of bitcoin, Tron-based $USDT, and Ethereum-based $USDT, transferred as part of fentanyl precursor sales.
Another alleged crypto money laundering operation, indicted by the US in 2024, allegedly worked with “Chinese underground money exchanges” and the Sinaloa Cartel to facilitate illicit funds connected to the drugs trade.
Fentanyl is a key contributor to opioid deaths in the US, and exports of the drug from China directly to the US were curtailed in 2019. However, by selling precursor chemicals instead, many companies can skirt regulations.
