US indicts Chinese nationals using crypto in global fentanyl trafficking

A federal grand jury in Ohio has indicted two Chinese pharmaceutical companies and six Chinese nationals over alleged fentanyl precursor trafficking and money laundering, with cryptocurrency playing a central role in the payment flows.

The indictment charges Shandong Believe Chemical Company Pte Ltd. and Shandong Ranhang Biotechnology Co. Ltd., along with six individuals, with supplying chemical precursors and cutting agents used to manufacture fentanyl, while directing customers to pay via crypto wallets under their control, according to a Wednesday statement.

The case is brought under the FBI’s “Operation Box Cutter” initiative, aiming to dismantle international fentanyl trafficking networks. Three of the defendants were also charged with attempting to provide material support to a Mexican drug cartel designated as a foreign terrorist organization.

According to the indictment, the companies allegedly marketed and sold substances such as medetomidine, an animal tranquilizer used to dilute and increase the volume of fentanyl, to drug traffickers operating in the U.S. and abroad. This “cutting agent” can increase the yield of one kilogram of fentanyl by at least 20 times, producing millions of street-level doses, per the statement.

If convicted, the defendants face penalties of up to life in prison for drug trafficking and up to 20 years for money laundering and terrorism-related charges.

Illicit crypto use

Authorities said cryptocurrency was key to facilitating transactions, with customers instructed to send funds to wallets controlled by the defendants before the proceeds were funneled into overseas financial institutions.

“This layering pattern starts with stablecoins received at an initial collection address that are then fragmented and passed through a chain of pass-through wallets, then converted to fiat at a cross-border exit point,” Research from TRM Labs said in a Wednesday report.

The case highlights the growing role of crypto in global illicit drug supply chains. TRM found that about 97% of China-based drug precursor manufacturers accept crypto payments. Onchain inflows to these vendors reached $39.1 million in 2025, up from $34.7 million in 2024 and $30.9 million in 2023.

The indictment also signals a broader enforcement shift toward targeting the upstream supply chain — including foreign suppliers, payment facilitators, and crypto wallet holders — rather than focusing solely on cartel operators, TRM noted.

“We are going after the entire chain of supply for these deadly drugs, from Mexican cartels and Chinese pharmaceutical companies to the high-level distributors on our streets in the Southern District of Ohio,” U.S. Attorney Dominick S. Gerace II said in the Wednesday statement.