A Chinese network suspected of exporting precursor chemicals for fentanyl has been linked to a significant cryptocurrency fraud scheme<\/strong> operating through Japan, according to an investigation by Nikkei<\/em>. The report reveals that this group utilized Japanese internet domains and created a counterfeit token named “Zksync.jp”<\/strong> to deceive cryptocurrency users globally. Losses from this fraudulent activity have reportedly reached hundreds of millions of yen<\/strong>, equivalent to over $1 million<\/strong>. The name of the token appears to mimic ZKsync<\/strong>, a legitimate Ethereum Layer 2 network developed by Matter Labs, with no evident connection between ZKsync and the alleged fraud.<\/p>\n The investigation identified Hubei Amarvel Biotech<\/strong>, a chemical company based in Wuhan, as central to the network. In 2025, two executives from Amarvel were acquitted of a major fentanyl charge but were convicted for conspiring to import a fentanyl precursor chemical and for money laundering. Nikkei<\/em> also reported that a Nagoya-based company named Firsky<\/strong> acted as a front for the network in Japan. A Chinese national, Xia Fengzhi<\/strong>, was identified as being involved in logistics and financial transactions from Japan. Firsky was liquidated in July 2024, and Xia’s current whereabouts are unknown.<\/p>\n Using wallet addresses disclosed in U.S. court evidence, Nikkei<\/em> traced the flow of funds linked to Amarvel and its Japanese operations. The report indicated that over 120 cryptocurrency transactions<\/strong> connected the network to entities under U.S. sanctions, suggesting a pattern of money laundering, although these findings are primarily based on on-chain tracing and court-related data. The transactions were reportedly clustered around parties associated with the Wuhan Yuancheng Group<\/strong>, which has been implicated in U.S. actions against Chuen Fat Yip<\/strong>, a Chinese national accused of leading a transnational drug operation. The U.S. State Department has offered a $5 million reward<\/strong> for information leading to his arrest.<\/p>\n The alleged “Zksync.jp”<\/strong> token utilized a Japanese domain suffix, which typically requires a registrant to have a Japanese address. However, Nikkei<\/em> reported that the domain registrant appeared to be a Chinese national based in Hong Kong with strong financial ties to Amarvel. Chainalysis<\/strong> informed Nikkei<\/em> that Japanese domains can lend credibility to fraudulent sites for users abroad. This aligns with a broader trend where criminal organizations exploit trusted jurisdictions, familiar project names, and blockchain transactions to facilitate cross-border fund transfers.<\/p>\n This case emerges as Japan seeks to expand its regulated cryptocurrency market. As previously reported by crypto.news<\/em>, Japan’s lower house passed a bill to reclassify cryptocurrency under the Financial Instruments and Exchange Act<\/strong>, with a related tax plan aiming for a 20% rate by 2028<\/strong>. This context presents a challenging environment for regulators, as Japan aims to attract legitimate crypto activities while Nikkei<\/em>‘s findings illustrate how criminal networks can exploit Japanese infrastructure to gain trust.<\/p>\n Additionally, the DEA<\/strong> signed a memorandum with the Japan Coast Guard in May to enhance enforcement against fentanyl smuggling. TRM Labs<\/strong> reported that 97%<\/strong> of 120 Chinese precursor manufacturers<\/strong> studied accepted cryptocurrency, with wallets linked to these manufacturers receiving over $26 million<\/strong> in 2023. The Nikkei<\/em> case adds a layer of Japan-linked fraud to the broader use of cryptocurrency in synthetic drug supply chains.<\/p>\n","protected":false},"excerpt":{"rendered":" Introduction A Chinese network suspected of exporting precursor chemicals for fentanyl has been linked to a significant cryptocurrency fraud scheme operating through Japan, according to an investigation by Nikkei. The re…<\/p>\n","protected":false},"author":3,"featured_media":20431,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[42,47],"tags":[4225,4203,11122,4218,4313,4280,4906,11676,9949,4413,4876],"class_list":["post-20432","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bitcoin","category-hack","tag-bitcoin","tag-china","tag-dea","tag-ethereum","tag-hack","tag-hong-kong","tag-japan","tag-matter-labs","tag-nikkei","tag-trm-labs","tag-zksync"],"yoast_head":"\nKey Findings<\/h2>\n
Financial Transactions and Money Laundering<\/h2>\n
Fraudulent Token and Domain Registration<\/h2>\n
Regulatory Context and Challenges<\/h2>\n
International Cooperation and Enforcement<\/h2>\n