Key Takeaways:
A Chinese chemical firm tied to fentanyl exports used a Japan front to run a crypto fraud scheme, distributing a fake Zksync.jp token that caused over $1 million in losses.
"The findings add to concerns that Japan's financial system can be exploited to disguise illicit proceeds as legitimate assets," Nikkei said, citing blockchain analysis that traced wallet addresses disclosed in US court evidence.
At the center of the case is Hubei Amarvel Biotech, a Wuhan-based chemical manufacturer whose two executives were convicted in a Manhattan federal court in February 2025 of conspiring to import fentanyl precursors into the US. Its Japanese front, a Nagoya company called Firsky that was liquidated in July 2024, served as an operational hub. Nikkei tracked more than 120 transactions involving US-sanctioned entities linked to a Chinese national accused of running a transnational drug operation.
The case shows how transnational criminal networks exploit crypto infrastructure across jurisdictions. Separately, South Korean police referred 23 suspects and detained two key figures over laundering $11.1 million in USDT for a Cambodia-based phishing group, with the suspected ringleader still at large under an Interpol Red Notice. Chainalysis warned the broader illicit ecosystem remains resilient, with new providers quickly filling gaps left by enforcement takedowns.
The fake Zksync.jp token, whose name borrows from the legitimate Ethereum Layer 2 network ZKsync, was issued in 2023 and targeted global crypto users. Nikkei built an analytical program using wallet addresses from US court evidence to trace Amarvel's fund flows, linking the network to Chinese financial-fraud groups.
The case adds pressure on Japan to tighten digital asset oversight. In April, the cabinet approved a bill to reclassify crypto as financial products, strengthening regulatory authority over the sector.
The broader crackdown on scam-compound networks has accelerated. In November, Interpol branded such networks a global transnational threat. US agencies launched a multi-agency Scam Center Strike Force that has frozen, seized, and forfeited more than $580 million in crypto tied to networks operating out of Burma, Cambodia, and Laos. Taiwan prosecutors charged 62 people over links to Cambodian tycoon Chen Zhi, who was extradited to China earlier this year. Cambodia in April passed its toughest anti-scam law yet, threatening compound bosses with up to life in prison.
Xue Yin Peh, head of investigative strategy and collections for APAC at Chainalysis, said stablecoins such as USDT remain the preferred vehicle for illicit flows because criminals use them for the same reasons legitimate users do: liquidity, portability, and relative price stability. On-chain transactions stay transparent and traceable, she noted, and issuers can freeze funds once illicit use surfaces.
This article is for informational purposes only and does not constitute investment advice.
