A Nikkei investigation has linked a Chinese network suspected of exporting fentanyl precursor chemicals to a large crypto fraud operation run through Japan — centered on a counterfeit “Zksync.jp” token that duped investors worldwide.
What Nikkei found
- The fake token used the Zksync name (copying ZKsync, a legitimate Ethereum Layer 2 developed by Matter Labs) but has no apparent connection to the real project. The scam leveraged a Japanese domain to boost credibility and reportedly inflicted losses of “hundreds of millions of yen” — more than $1 million by Nikkei’s accounting.
- Investigators traced the scheme to Hubei Amarvel Biotech, a Wuhan chemical company. In 2025 two Amarvel executives were acquitted of a top fentanyl charge but convicted on counts of conspiring to import a fentanyl precursor and conspiring to launder money.
- Nikkei says a Nagoya-based firm called Firsky acted as a Japanese front. Firsky was liquidated in July 2024. A Chinese national named Xia Fengzhi was identified as handling logistics and funds from Japan; his whereabouts are currently unknown.
- Using wallet addresses disclosed in U.S. court filings, Nikkei mapped more than 120 crypto transactions tied to Amarvel and Japan-linked entities. Many transactions connected to entities already subject to U.S. sanctions and clustered around parties linked to Wuhan Yuancheng Group — a network U.S. authorities have tied to Chuen Fat Yip, a fugitive wanted for leading an international drug operation (the State Department has offered a $5 million reward for information).
- The “Zksync.jp” domain registrant appeared to be a Chinese national based in Hong Kong with close financial links to Amarvel. (Note: .jp domains normally require a Japanese address.) Chainalysis told Nikkei that using Japanese domains can make fraud sites appear more trustworthy to overseas users.
Context and wider significance
- Nikkei’s findings feed into a broader picture of crypto’s role in synthetic drug supply chains. TRM Labs reported that 97% of 120 Chinese precursor manufacturers it studied accepted crypto, and wallets tied to those manufacturers received over $26 million in 2023.
- The case arrives as Japan is moving to expand its regulated crypto market: the lower house has passed a bill to reclassify crypto under the Financial Instruments and Exchange Act, and linked tax plans aim for a 20% rate by 2028. That push to attract regulated activity comes amid evidence that criminal networks can exploit Japanese infrastructure and familiar brand names to build trust.
- Enforcement responses are also growing: the DEA signed a memorandum with the Japan Coast Guard in May to strengthen cooperation against fentanyl smuggling.
Why it matters for crypto users and platforms
- The investigation underscores two ongoing risks: the use of trusted jurisdictions and familiar project names to impersonate legitimate services, and the movement of illicit proceeds via on-chain transfers that can be traced but also obfuscated. For traders, developers and exchanges, the case highlights the need for rigorous domain vetting, stricter token listing controls, and continued collaboration between blockchain analytics firms, law enforcement and regulators.
Nikkei’s report draws on on-chain tracing and U.S. court-linked data; its conclusions point to a sophisticated cross-border scheme blending chemical-trafficking networks and crypto-fraud tactics, with Japan unwittingly used as a credibility layer.
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