Fentanyl Network Used Fake zksync.jp Token to Defraud Japan

Investigators found a Chinese criminal network issued a fraudulent cryptocurrency token called zksync.jp to defraud investors in Japan, stealing hundreds of millions of yen. The same network is accused of exporting fentanyl precursors to the United States. The token and a Japan-based cover company were linked to Hubei Amarvel Biotech, a Chinese chemical manufacturer with prior ties to drug-trafficking groups.

The token used a domain name similar to a legitimate Japanese fast-payments service to persuade users to deposit funds. The operation ran through a Japan-registered shell firm identified as Firsky. Victims reported combined losses of hundreds of millions of yen, equal to several million U.S. dollars.

Blockchain and financial records show frequent transfers of cryptocurrency between Amarvel and known Chinese financial fraud groups. Investigators traced more than 120 transfers connecting Amarvel to other actors, including flows linked to Wuhan Yuangcheng. The U.S. Department of State has designated the leader of Wuhan Yuangcheng and is offering up to $5 million for information leading to his capture.

Authorities state the token offering was used to move illicit proceeds. Funds were routed through chains of cryptocurrency transfers tied to companies operating across borders, and investigators are tracing those flows through exchanges and related entities.

Two executives from Hubei Amarvel Biotech were convicted in a U.S. court last year for links to criminal suppliers. U.S. drug enforcement officials are focusing on transit routes that exploit weaknesses in shipment screening.

David King, special agent in charge of the DEA’s Asia-Pacific division, warned: “Japan serves as a transshipment area for drug-trafficking organizations that take advantage of the lax scrutiny of commercial shipments to America compared to that of Chinese shipments.”

Japanese financial crime units and international partners are continuing investigations into the network, the cover company and the token issuer. Authorities are working to identify beneficiaries and recover assets for victims.