Fentanyl-linked Chinese network tied to crypto fraud from Japan involving fake ‘Zksync.jp’ token: Nikkei

A Chinese organization suspected of illegally exporting fentanyl precursor chemicals also was linked to a large-scale cryptocurrency fraud through a base in Japan, according to an investigation by Nikkei published Sunday.

The criminal group allegedly used Japanese internet domains to defraud crypto users and moved funds through accounts tied to entities under U.S. sanctions, the report said, in what Nikkei described as evidence of a broader money-laundering operation.

At the center is Hubei Amarvel Biotech, a Wuhan-based chemical manufacturer. Two of its executives were convicted in a Manhattan federal court in February 2025 of conspiring to import fentanyl precursors into the U.S.

Amarvel's Japanese front, a Nagoya company called Firsky, served as an operational hub where a figure Nikkei previously identified as Chinese national Xia Fengzhi, 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. It focused on activity after September 2022, when Firsky relocated to Nagoya, and flagged suspicious transactions as early as that October.

The blockchain trails connected the network to Chinese financial-fraud groups, per 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 name appears to borrow from ZKsync, a legitimate Ethereum Layer 2 network built by Matter Labs that has no apparent connection to the alleged fraud. 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.

Nikkei also tied the network to parties blacklisted by the U.S. Treasury's Office of Foreign Assets Control. It 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.

Tien-Peng Ho of analytics firm TRM Labs told Nikkei that Japan's proximity to mainland China, open financial system and heavy cross-border trade make it an attractive place to disguise illicit proceeds as legitimate.

The findings track a pattern onchain investigators have documented for years. 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.

The case comes as Japan works to expand its regulated crypto market. 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.

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. Even so, authorities in Japan and elsewhere remain behind in tracking drug money that moves through crypto, the report said.