This week, blockchain analytics firm Elliptic revealed that over a year, cryptocurrency payments to import ingredients needed to produce fentanyl had increased by 450%. While this increase is worrying, let’s take a closer look at these figures to put them into perspective.
The Role of Cryptocurrencies in the Fentanyl Trade
Elliptic, a company specializing in on-chain analysis, conducted a survey on the place of cryptocurrencies in the illegal production of fentanyl. In short, this substance, initially used for pharmaceutical purposes, can be diverted as a narcotic.
In the United States in particular, it is a real public health problem, as its effects are devastating on the human body. Cheaper than heroin and 50 times more powerfulthis drug would be the leading cause of death among Americans aged 18 to 45.
In 2019, diplomatic tensions led the Chinese government, then the main exporter to the United States, to regulate exports of the drug.
Regarding the narcotic, production has moved to Mexico, where traffickers import fentanyl precursors from China, to then send the finished product illegally to their neighbors to the north. The precursors are in fact ingredients necessary for the synthesis of the molecule.
For its part, Elliptic has identified 90 Chinese companies involved in the production of fentanyl precursors. Among them, it turned out that 90% accepted cryptocurrencies as a means of payment.
The analytics firm’s survey found that year-over-year, cryptocurrency transactions for supplier payment increased by 450%, and purchases were mostly settled in BTC and USDT:
Number of crypto payments received by Chinese exporters of fentanyl precursors
In terms of volumes, this represents $27 million over the entire study periodwhich would produce $54 billion in market value.
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Figures to put into perspective
Of course, all drug-related excesses are a real social problem, and far be it from us to question this. But faced with this type of news, one should not make the mistake of making the famous shortcut “cryptocurrencies fund drug trafficking“.
First, 27 million dollars is a paltry sum compared to an ecosystem that weighs more than 1,150 billion dollars in capitalization. In terms of trading volumes and over the last 24 hours only, Binance alone recorded over $3 billion.
It is also surprising that USDT and BTC are still used for illegal payments, given the ease with which they can be traced by specialized actors.
Moreover, Elliptic has identified, without naming them, 3 cryptocurrency exchanges which were used by the companies concerned to receive payments. So, the analytics firm contacted said platforms and reported “hundreds of addresses“.
In a way, the use of cryptocurrencies for such use cases could even be an advantage for the competent authorities, their thus facilitating the work of identification.
👉 Also in the news — Hong Kong allows retail investors to buy cryptocurrencies
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