U.S. authorities are investigating allegations that a Chinese fentanyl smuggling organization has exploited Japan's reputable '.jp' domain and local corporations for involvement in crypto fraud and money laundering. This raises concerns that Japan may be misused not only as a transit point for drug precursors but also as a financial conduit for concealing criminal proceeds.
On June 22, the Nihon Keizai Shimbun (Nikkei) reported findings from its own investigation, suggesting that the Chinese chemical company Hubei Amavel Biotech is implicated in large-scale crypto fraud through its operations in Japan. The company has been under investigation by U.S. authorities for allegedly illegally exporting fentanyl precursors. Two executives from the company were convicted last year in the U.S. for importing fentanyl precursors and money laundering.
According to Nikkei, Amavel operated a corporation named FIRSKY in Nagoya, Japan. This was not merely a local office; it was identified as a hub where an individual referred to as the 'boss of Japan' directed logistics and financial management. The U.S. Drug Enforcement Administration (DEA) stated in May that Japan has been used as a transit point for illegal fentanyl exports. Following the allegations of the Japanese corporation being used as a logistics hub, indications of crypto fraud and money laundering have also emerged.
The suspicions surrounding the Japanese operations led to an investigation into crypto transactions. Nikkei analyzed court evidence and blockchain transaction records, revealing that Amavel frequently exchanged funds with a Chinese fraud organization. Based on these transaction relationships and personal connections, Nikkei believes Amavel was involved in distributing a fraudulent token called 'zksync.jp,' disguised as a legitimate payment service. Users who mistakenly opened this token lost their funds, with estimated losses amounting to hundreds of millions of yen, including in Japan.
Notably, this fraudulent token utilized the '.jp' domain, which is generally reserved for businesses or individuals with addresses in Japan, lending it a high level of international credibility. Nikkei reported that the issuance date of this domain coincided with Amavel's activities in Japan.
Evidence of transactions with U.S. sanctions targets has also been confirmed. Nikkei reported that Amavel exchanged over 120 crypto assets with U.S. Treasury-sanctioned entities, primarily linked to the Chinese illegal chemical organization Wuhan Yuanqing Group. The CEO of Wuhan Yuanqing Group is a Chinese national identified by U.S. authorities as a 'drug kingpin,' with a $5 million bounty on his head. The newspaper suggested that the transactions were intended to obscure the source of the funds through multiple wallets.
Fentanyl is used as a medical pain reliever, but illegal distribution has become a serious social issue in the U.S. As Chinese chemical companies and Mexican drug cartels are identified as key players in the supply chain, the U.S. has intensified its crackdown. According to an investigation by the U.S. House Financial Services Committee, suspected financial transactions linked to drug cartels from China are projected to reach $312 billion over the next five years by 2024. The Japan Coast Guard signed a memorandum of cooperation with the DEA in May to enhance drug enforcement collaboration.
Nikkei pointed out that while enforcement networks are tightening, countries still lag in addressing drug-related financial issues. An expert from the U.S. analysis firm TRM Labs noted that Japan's active trade and open financial system make it an 'attractive route for making illegal profits appear legitimate.'
* This article has been translated by AI.
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