A Chinese organization linked to illegal fentanyl precursor exports conducted large-scale cryptocurrency fraud through a Japanese operational base, according to a Nikkei investigation published Sunday. Two executives of Hubei Amarvel Biotech, a Wuhan-based chemical manufacturer, were convicted in Manhattan federal court in February 2025 of conspiring to import fentanyl precursors into the U.S. The network allegedly used Japanese internet domains to distribute a fraudulent token called "Zksync.jp," defrauding users of upward of $1 million, and moved funds through accounts tied to U.S.-sanctioned entities. The scheme operated through Firsky, a Nagoya company that served as Amarvel's Japanese front and was liquidated in July 2024. Japan's proximity to mainland China, open financial system, and heavy cross-border trade make it an attractive venue for disguising illicit proceeds as legitimate transactions, according to analytics firm TRM Labs.
Amarvel Executives Convicted in U.S. Federal Court
Two executives of Hubei Amarvel Biotech were convicted in a Manhattan federal court in February 2025 of conspiring to import fentanyl precursors into the U.S., according to the Nikkei report. Amarvel's Japanese front company, Firsky, operated from Nagoya and served as a hub where Chinese national Xia Fengzhi, identified by Nikkei as the "boss in Japan," directed logistics and money management. Firsky was liquidated in July 2024, and Xia's whereabouts are unknown. Using wallet addresses disclosed in U.S. court evidence, Nikkei built an analytical program to map how Amarvel moved funds, focusing on activity after September 2022 when Firsky relocated to Nagoya.
Fraudulent Zksync.jp Token Defrauds Users of Over $1 Million
The blockchain trails connected the network to Chinese financial-fraud groups, according to the report. One scheme distributed a fraudulent token under the name "Zksync.jp," built to imitate an established payment service and trick users into sending funds. Total losses, including victims in Japan, ran into the hundreds of millions of yen, or upward of $1 million, Nikkei said. The "zksync.jp" token used the ".jp" suffix, which normally requires a registrant with a Japanese address, and was issued in 2023, overlapping with Amarvel's operations through Firsky. The domain's registrant appears to be a Chinese national living in Hong Kong with close financial ties to Amarvel, Nikkei reported. Blockchain forensics firm Chainalysis told Nikkei the setup is a common money-laundering method, since Japanese domains carry international credibility that makes them useful cover.
Network Transacted With U.S.-Sanctioned Entities
Nikkei tied the network to parties blacklisted by the U.S. Treasury's Office of Foreign Assets Control. The investigation counted more than 120 transactions with sanctioned entities clustered around the Wuhan Yuancheng Group, routed through multiple accounts to obscure the source of funds. Yuancheng is led by Chuen Fat Yip, a Chinese national the U.S. accuses of running a transnational drug operation across mainland China and Hong Kong. The State Department has offered a $5 million reward for information leading to his arrest. TRM Labs has found that roughly 97% of the more than 120 China-based drug-precursor manufacturers it studied accept crypto, and a federal grand jury in Ohio indicted two Chinese firms and six nationals on related charges in March. Chainalysis has separately traced $5.5 million in stablecoins from Latin American cartels to Chinese fentanyl producers, and earlier estimated that wallets linked to suspected chemical shops took in $250 million since 2015.
Japan Advances Crypto Regulation and Enforcement
The Japanese cabinet in April approved a bill to reclassify crypto as financial products, and regulators are weighing approval of the country's first crypto ETFs as early as 2028, according to the report. In May, the DEA signed a memorandum with the Japan Coast Guard to tighten enforcement against fentanyl smuggling, and the U.N. Office on Drugs and Crime has begun its own countermeasures, per Nikkei. Authorities in Japan and elsewhere remain behind in tracking drug money that moves through crypto, the report said.
FAQ
What did Hubei Amarvel Biotech executives get convicted of in February 2025?
Two executives of Hubei Amarvel Biotech were convicted in a Manhattan federal court in February 2025 of conspiring to import fentanyl precursors into the U.S., according to a Nikkei investigation published Sunday.
How much did victims lose in the Zksync.jp token fraud?
Total losses from the fraudulent "Zksync.jp" token, including victims in Japan, ran into the hundreds of millions of yen, or upward of $1 million, Nikkei reported. The token was built to imitate an established payment service and trick users into sending funds.
What enforcement actions has Japan taken against fentanyl-linked crypto activity?
In May, the DEA signed a memorandum with the Japan Coast Guard to tighten enforcement against fentanyl smuggling, per Nikkei. The Japanese cabinet in April approved a bill to reclassify crypto as financial products, and regulators are weighing approval of the country's first crypto ETFs as early as 2028.
