Massachusetts Sen. Elizabeth Warren has suggested a link between cryptocurrency payments and companies based in China that provided precursors for the opioid fentanyl.
In a May 31 hearing of the United States Senate Banking Committee on China, Warren pointed to a report from blockchain analytics firm Elliptic to suggest a connection between cryptocurrency and “illegal drug transactions” at Chinese companies. Elliptic reported on May 23 that 90% of roughly 90 China-based firms supplying fentanyl precursors were willing to accept payment in cryptocurrencies, including Bitcoin (BTC).
“Crypto is supposedly banned in China,” said Warren, proceeding to cite data from the Elliptic report. “The number of crypto transactions associated with Chinese fentanyl brokers increased by 450% just last year alone.”
Today's hearing is about protecting our national & economic security from threats posed by China.— Senate Banking and Housing Democrats (@SenateBanking) May 31, 2023
We must prevent U.S. tech, know-how, & financing from enabling the Chinese military—and address foreign investment that threatens national security.
Elizabeth Rosenberg, assistant secretary for terrorist financing and financial crimes at the U.S. Treasury Department, told Warren that the drug brokers likely relied on the pseudonymous nature of crypto transactions for payments. Rosenberg confirmed Warren’s sentiment that crypto was one of the major payment methods for Chinese companies.
The Massachusetts senator said she planned to reintroduce legislation aimed at addressing some of the regulatory gaps affecting these payments to companies engaged in the illegal drug trade. Warren first introduced the Digital Asset Anti-Money Laundering Act in 2022 and has suggested at earlier congressional hearings on crypto she was preparing to reintroduce the bill.
“Congress has talked about fentanyl long enough. We propose to do something to fight back.”
According to data from the National Institutes of Health, in 2021 there were more than 70,000 deaths involving the overdose of synthetic opioids such as fentanyl in the United States. One of the most high-profile platforms that often facilitated illegal drug transactions using crypto payments, Silk Road, was shut down in 2013 and its founder, Ross Ulbricht, was sentenced to life in prison.