Chinese fentanyl-linked firm ran Japan crypto scam

Hubei Amarvel Biotech, a Wuhan chemical maker tied to fentanyl-precursor exports, operated a Japan-based cryptocurrency fraud through a Nagoya shell company that issued a counterfeit token called ‘zksync.jp' in 2023 and diverted large sums from investors.

U.S. court records show two Amarvel executives were convicted in Manhattan in February 2025 for conspiring to import fentanyl precursors. Investigators traced a parallel operation to a Nagoya-registered firm, Firsky, which relocated there in September 2022 and was liquidated in July 2024. A person identified in filings as Xia Fengzhi was described as the “boss in Japan” and is currently unlocated.

Blockchain analysis used wallet addresses disclosed in court filings to map how funds moved through the network. The counterfeit token mimicked the name and branding of a legitimate Ethereum Layer 2 service and urged users to send funds to wallets controlled by the group. Total losses reported by investigators reached into the hundreds of millions of yen (more than $1 million).

Forensic tracing linked transactions from the Amarvel network to Chinese financial-fraud groups and to parties designated by U.S. sanctions. Analysts identified more than 120 transactions connected to accounts clustered around the Wuhan Yuancheng Group and its leader, Chuen Fat Yip. U.S. authorities have accused Yip of operating a transnational drug network and have offered a $5 million reward for information leading to his arrest.

A technical review found suspicious activity as early as October 2022, shortly after Firsky moved to Nagoya. Investigators say the use of a “.jp” domain was intended to convey legitimacy because registrants typically must provide a Japanese address. Public records indicate the domain registrant is a Chinese national living in Hong Kong with financial links to Amarvel.

Analysts have documented wider crypto use by chemical companies tied to fentanyl production. One analytics firm estimated that roughly 97% of more than 120 China-based drug-precursor manufacturers it studied accept cryptocurrency payments. Other chain-tracking work has linked stablecoin flows from Latin American cartels to Chinese fentanyl producers and found that wallets tied to suspected chemical suppliers have received substantial sums since 2015.

Japan and the United States have taken policy steps in response. In April, the Japanese cabinet approved legislation to classify cryptocurrency as a financial product. Domestic regulators are reviewing the possible approval of crypto exchange-traded funds as early as 2028. In May, the U.S. Drug Enforcement Administration signed a memorandum with the Japan Coast Guard to strengthen joint enforcement against fentanyl smuggling.

Tien-Peng Ho of analytics firm TRM Labs noted, “Tying illicit funds to Japanese entities and domains gives fraudsters greater international credibility and helps hide the origin of the money.” Investigators say the case highlights challenges in tracing drug-related funds that are routed through layered crypto transactions and international corporate fronts.