A Chinese chemical manufacturer, Hubei Amarvel Biotech, previously linked to fentanyl precursors, is now tied to a crypto fraud in Japan that caused over $1 million in losses. A Nikkei investigation found the network used a fake "Zksync.jp" token and laundered funds through Japan, conducting over 120 transactions with U.S.-sanctioned entities. The case highlights challenges in tracking illicit crypto flows.
Amarvel fentanyl precursor network
- ▪A Chinese organization, Hubei Amarvel Biotech, suspected of exporting fentanyl precursors, has been linked to a large-scale cryptocurrency fraud based in Japan
- ▪Nikkei identified Xia Fengzhi as the "boss in Japan" for the operation; Firsky was liquidated in July 2024 and his whereabouts are unknown
- ▪A Nagoya-based company named Firsky served as the Japanese front for Hubei Amarvel Biotech, directed by a Chinese national, Xia Fengzhi
- ▪Two executives from Hubei Amarvel Biotech were convicted in a Manhattan federal court in February 2025 for conspiring to import fentanyl precursors into the U.S.
Zksync.jp cryptocurrency fraud scheme
- ▪The criminal network used a fraudulent token named "Zksync.jp" to defraud cryptocurrency users, causing over $1 million in losses
- ▪The fraudulent token was issued in 2023 using a ".jp" domain, which typically requires a registrant with a Japanese address
- ▪The domain registrant for "zksync.jp" is reportedly a Chinese national in Hong Kong with close financial ties to Hubei Amarvel Biotech
- ▪The "Zksync.jp" token was designed to imitate the legitimate Ethereum Layer 2 network ZKsync, which has no connection to the fraud
Blockchain money laundering operations
- ▪Research from TRM Labs found that approximately 97% of over 120 studied China-based drug-precursor manufacturers accept cryptocurrency
- ▪Tien-Peng Ho of TRM Labs stated Japan is an attractive location for money laundering due to its proximity to China and open financial system
- ▪According to blockchain forensics firm Chainalysis, using Japanese domains is a common money-laundering method due to their international credibility
- ▪An investigation by Nikkei used wallet addresses from U.S. court evidence to map the flow of funds from Hubei Amarvel Biotech
U.S. sanctions connections
- ▪The sanctioned entities were clustered around the Wuhan Yuancheng Group, which is led by Chinese national Chuen Fat Yip
- ▪The U.S. accuses Chuen Fat Yip of running a transnational drug operation and has offered a $5 million reward for his arrest
- ▪The Nikkei investigation found over 120 transactions between the network and entities sanctioned by the U.S. Treasury's Office of Foreign Assets Control
Japan regulatory response
- ▪The U.S. DEA and the Japan Coast Guard signed a memorandum in May to tighten enforcement against fentanyl smuggling
- ▪The Nikkei report concluded that authorities in Japan and elsewhere are lagging in their ability to track drug money that moves through crypto
- ▪The Japanese cabinet approved a bill in April to reclassify cryptocurrency as a financial product
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