Chinese crime syndicates are using cryptocurrencies to launder billions of dollars, including money raised from helping supply drugs to the U.S. or scamming American victims…They are using crypto to launder the profits of drug dealing and illegal gambling, and have made huge amounts from investment scams that promise easy returns in the cryptocurrency markets. Crypto addresses linked to a group of suspected chemical traders based in China have received more than $37.8 million worth of assets since 2018 in exchange for shipping a key ingredient of fentanyl, the research firm Chainalysis said in a report in 2023. These shipments are often sent to Central America and Mexico, where drug cartels use them to manufacture the drug, which is then shipped to the U.S.

In October 2024, the U.S.’s Office of Foreign Assets Control sanctioned a network of individuals and companies based in China over the manufacturing and distribution of ingredients used in fentanyl and other drugs. Some of those individuals held cryptocurrency wallets to send and receive funds, the Treasury Department said. Fentanyl use by Americans has become a major public health issue, contributing to more than 100,000 deaths a year, according to the latest figures from the Centers for Disease Control and Prevention.

Scammers in China and Florida shared the same two crypto wallet addresses, implying they are likely parts of the same group, according to a joint investigation published in January 2024 by ChainArgos, a Singapore-based blockchain data platform, and Bitrace, a China-based blockchain research group…Chinese law-enforcement agencies across the country have investigated more than 800 cases, shut down five underground banks used to help process payments, and uncovered about $4 billion worth of funds based on blockchain data…Chinese prosecutors also have charged well-known crypto executives. Zhao Dong, founder of a major over-the-counter crypto platform in China called RenrenBit, was sentenced to seven years in prison in 2022 after providing crypto-exchange services to an illicit business involved in overseas gambling and so-called pig-butchering scams.

Tether, a stablecoin pegged to the U.S. dollar, has been used as a way for these groups to switch between different fiat currencies.

Excerpts from Weilun Soon, Chinese Gangs Use Cryptocurrencies to Launder Billions, WSJ, Mar. 2, 2024