Blockchain
Cryptocurrency deposits at Chinese precursor manufacturers will increase by 600% in 2023
Blockchain intelligence firm TRM Labs says China-based precursor manufacturers received over $26 million in cryptocurrencies in 2023, with around 60% of payments made in Bitcoin.
It seems that cryptocurrency is becoming the preferred payment method Chinese drug manufacturers as the amount of cryptocurrencies deposited in wallets linked to these entities increased sixfold from 2022 to 2023, according to TRM laboratoriesa blockchain intelligence company backed by JPMorgan Chase, Visa, Citi, and PayPal, among others.
In a recent research report shared with crypto.news, analysts at TRM Labs revealed that deposits to addresses linked to Chinese drug makers more than doubled in the first four months of 2024 compared to the same period in 2023. In 2023, Chinese precursor networks received over $26 million, with 11 manufacturers accounting for “over 70% of all cryptocurrency-denominated drug precursor sales.”
“Cryptocurrency funds sent to Chinese precursor manufacturers mainly come from unhosted wallets, cryptocurrency exchanges and payment services; Manufacturer wallets are most commonly hosted on exchanges.”
TRM laboratories
About 60% of the volume of cryptocurrency payments to Chinese precursor manufacturers occurred on Bitcoin blockchain, followed by 30% on TRON blockchain and about 6% on Ethereum blockchain, the data shows. Despite the surge in cryptocurrency payments, Chinese manufacturers also appear to be comfortable accepting fiat currency payments via PayPal, MoneyGram, Western Union, and bank transfers.
Drug sales via blockchain | Source: TRM Laboratories
According to the TRM Labs study, Chinese pharmaceutical precursors are mainly destined for Canada, the Netherlands, Australia, Germany and the United States as the main shipping countries. However, there are also advertisements targeting Russia and neighboring countries for mephedrone precursors.
In April, a U.S. congressional panel reported that China is subsidizing the illicit production of fentanyl precursors, fueling the opioid crisis in the United States. The Committee reportedly found that China offers value-added tax breaks to companies that produce fentanyl analogs, precursors and other synthetic narcotics, as long as they sell them outside of China.
Like another blockchain intelligence firm, Elliptic, noted previouslyFentanyl is favored by drug cartels due to its lower production cost than heroin and its potency, which is 50 times stronger, making it the leading cause of death for Americans ages 18 to 45 .