This week, blockchain analytics firm Elliptic revealed that over the course of a year, payments in cryptocurrencies 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 specialising in on-chain analysis has conducted an investigation into the role 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, given the devastating effects it has on the human body. Cheaper than heroin and 50 times more potent, this drug is said to 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.
Production of the drug has shifted to Mexico, where traffickers import fentanyl precursors from China and then send the finished product illegally to their neighbours to the north. The precursors are in fact the ingredients needed to synthesise the molecule.
For its part, Elliptic identified 90 Chinese companies involved in the production of fentanyl precursors. Of these, 90% were found to accept cryptocurrencies as a means of payment.
The analyst firm’s survey concluded that over one year, cryptocurrency transactions for supplier payments had increased by 450%, and that purchases were mainly 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 period studied, which would produce $54 billion in market value.
Figures to be put into perspective
Of course, all the excesses associated with drugs are a real problem for society, and far be it from us to question that. But when faced with this type of news, we should not make the mistake of making the famous shortcut “cryptocurrencies fund drug trafficking”.
Firstly, $27 million is a derisory sum compared with an ecosystem worth more than $1,150 billion in capitalisation. In terms of trading volumes, Binance alone has recorded more than $3 billion in the last 24 hours alone.
It is surprising that USDT and BTC are still used for illegal payments, given the ease with which they can be traced by specialist players.
In fact, Elliptic has identified, without naming them, 3 cryptocurrency exchanges that were being used by the companies concerned to receive payments. The analysis company contacted these platforms and reported “hundreds of addresses”.
In a way, the use of cryptocurrencies for such cases could even be an advantage for the competent authorities, making their identification work easier.
