Crypto’s dark role in the US opioid epidemic

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Hel­lo and wel­come to this week’s edi­tion of the FT’s Crypto­fi­nance newslet­ter. This week we’re tak­ing a look at anoth­er “cryp­to use case” . . . pur­chas­ing fentanyl.

After last year’s his­toric mar­ket crash and sub­se­quent col­lapse of many high-pro­file com­pa­nies, the cryp­to indus­try is in over­drive to con­vince scep­tics that there are use­ful fea­tures to cryp­tocur­ren­cies that demand main­stream adoption.

Crit­ics of crypto’s use aren’t short of ammu­ni­tion, point­ing to its hefty car­bon foot­print, lack of basic con­sumer pro­tec­tion, cor­po­rate ran­somware and the financ­ing of North Korea’s nuclear weapons programme.

This week anoth­er tar­get emerged. Blockchain ana­lyt­ics firm Ellip­tic pub­lished a study link­ing cryp­tocur­ren­cies with the spread of fen­tanyl, a potent syn­thet­ic opi­oid and the lead­ing cause of death for 18- to 45-year-olds in the US.

Accord­ing to Ellip­tic, most fen­tanyl traf­ficked into the US is man­u­fac­tured using chem­i­cal ingre­di­ents import­ed from Chi­nese sup­pli­ers, and 90 per cent of these sup­pli­ers accept cryp­tocur­ren­cy payments.

Elliptic’s research team received offers to sup­ply large quan­ti­ties of one par­tic­u­lar chem­i­cal ingre­di­ent which is not used to man­u­fac­ture any oth­er prod­uct, and is a con­trolled sub­stance in most coun­tries. A “menu” of chem­i­cals pro­vid­ed to the Ellip­tic team also includ­ed ingre­di­ents for metham­phet­a­mine and amphetamine. 

“It’s hard to say how impor­tant cryp­to is to this type of activ­i­ty but the fact that such a large pro­por­tion of these sup­pli­ers accept cryp­to sug­gests to me there is a sig­nif­i­cant demand to pay in cryp­to for these types of chem­i­cals,” Tom Robin­son, Elliptic’s chief sci­en­tist and co-founder, told me over the phone.

The fen­tanyl epi­dem­ic plagu­ing the US is hard to over­state. The illic­it drug has replaced legal­ly pre­scribed painkillers as the main cause of over­dose in the coun­try, and the death rate is equiv­a­lent to one Amer­i­can over­dos­ing every five minutes.

Along­side Covid-19, the fen­tanyl epi­dem­ic has dri­ven US life expectan­cy down to 76.4 years, a low not seen for the past 25 years. 

Per Ellip­tic, the cryp­tocur­ren­cy wal­lets used by these com­pa­nies have received a total sum of more than $27mn, enough to pur­chase ingre­di­ents that could pro­duce fen­tanyl pills with a street val­ue of rough­ly $54bn.

“The issue here is that a rel­a­tive­ly small amount of cryp­tocur­ren­cy can pur­chase enough chem­i­cals to pro­duce vast amounts of fen­tanyl, and we know that fen­tanyl is killing mil­lions of peo­ple . . . so the impact that cryp­to is poten­tial­ly hav­ing here is extreme,” he added.

More­over, the num­ber of pay­ments sent to Chi­nese sup­pli­ers of ingre­di­ents used to make fen­tanyl is sky­rock­et­ing. Accord­ing to Ellip­tic, just one pay­ment using cryp­to was made for these prod­ucts in Jan­u­ary 2021. By last month, the fig­ure was more than 600.

Column chart of Number of payments in cryptocurrencies showing Cryptocurrency payments received by identified fentanyl precursor suppliers

Robin­son told me he believed cryp­to was an “inher­ent­ly neu­tral tech­nol­o­gy”, and that the same char­ac­ter­is­tics that made it prone to illic­it use also made it a great tool for cross-bor­der pay­ments. “Extreme­ly pow­er­ful tech­nolo­gies can be used for good and bad, that’s just the nature of them.”

But it adds anoth­er dynam­ic to America’s increas­ing­ly com­pli­cat­ed rela­tion­ship with cryp­to. On the one hand, mar­kets reg­u­la­tors, the Depart­ment of Jus­tice and the Trea­sury are try­ing to stamp out illic­it cryp­to activ­i­ty where they can: enforce­ment, crim­i­nal charges and sanctions.

Yet there are also plen­ty of cryp­to sup­port­ers in Wash­ing­ton, includ­ing Repub­li­can leg­is­la­tors Tom Emmer, Cyn­thia Lum­mis and Patrick McHen­ry. Democ­rats such as Max­ine Waters, a mem­ber of the US House finan­cial ser­vices com­mit­tee, are less convinced. 

Capi­tol Hill is a deeply divid­ed place, as the pro­tract­ed talks over the US debt ceil­ing have high­light­ed. It remains to be seen whether crypto’s link to America’s dead­ly opi­oid epi­dem­ic will change any minds.

What are your thoughts on the role of cryp­tocur­ren­cies in the fen­tanyl epi­dem­ic? As always please share your thoughts with me via email at

Weekly highlights

  • The run of bad cryp­to news con­tin­ues: UK loss­es to cryp­to fraud increased by more than 40 per cent in the past year and sur­passed £300mn for the first time in his­to­ry, accord­ing to Britain’s fraud report­ing agency Action Fraud. My col­league Sid­dharth Venkatara­makr­ish­nan has the sto­ry here.

  • Iosco, the umbrel­la group for glob­al mar­kets reg­u­la­tors, pushed nation­al reg­u­la­tors to break up cryp­to com­pa­nies inter­twined with intractable con­flicts of inter­est. Fol­low­ing the col­lapse of Sam Bankman-Fried’s FTX and crit­i­cisms over the trans­paren­cy of Binance’s cor­po­rate struc­ture, Iosco has pushed cryp­to con­flicts of inter­est into the spot­light. My sto­ry with Lau­ra Noo­nan here.

  • Ter­raform Labs co-founder and dis­graced for­mer cryp­to king­pin Do Kwon had his bail revoked in Mon­tene­gro. He was arrest­ed ear­li­er this year after the $40bn implo­sion of the ter­raUSD and luna tokens a year ago set off an inter­na­tion­al man­hunt. He was arrest­ed try­ing to leave Mon­tene­gro on a false passport.

  • Anoth­er reg­u­la­to­ry update: the Euro­pean Sys­temic Risk Board said in a report that reg­u­la­tors in the EU should intro­duce lim­its on lever­aged bets across cryp­to mar­kets in order to lim­it risks posed to finan­cial sta­bil­i­ty in the broad­er eco­nom­ic sys­tem. The ESRB also said the cre­ation and design of smart con­tracts — a foun­da­tion­al tech­nol­o­gy in decen­tralised finance — should be over­seen by regulators.

  • Fol­low­ing in the foot­steps of El Sal­vador, Bhutan — where the phrase “gross nation­al hap­pi­ness” was first coined to rival gross domes­tic prod­uct — is invest­ing in bit­coin min­ing. Druk Hold­ing & Invest­ments, the state-owned com­mer­cial hold­ing com­pa­ny, will start pitch­ing to investors to raise up to half a bil­lion dol­lars for a cryp­to min­ing busi­ness. My col­league Ben­jamin Parkin in New Del­hi has the sto­ry here.

Soundbite of the week: DeSantis backs bitcoin

Ron DeSan­tis, con­tro­ver­sial gov­er­nor of Flori­da and new pres­i­den­tial can­di­date, is on team bitcoin.

Dur­ing a Twit­ter Spaces ses­sion with Elon Musk this week (when it worked) the Repub­li­can many con­sid­er the biggest rival to Don­ald Trump, crit­i­cised the “cur­rent regime” for its stance on bitcoin.

“The cur­rent regime clear­ly has it out for bit­coin . . . and if it con­tin­ues for anoth­er four years, they’ll prob­a­bly end up killing it.”

Data mining: TUSD enters the big leagues

The sta­ble­coin mar­ket in 2023 has been dom­i­nat­ed by two com­pa­nies, Teth­er and Cir­cle, which have had very dif­fer­ent fortunes.

Teth­er — the off­shore, BVI-reg­is­tered com­pa­ny which issues an epony­mous token with rough­ly $80bn in cir­cu­lat­ing val­ue — has gripped the sta­ble­coin mar­ket with rough­ly 60 per cent of mar­ket share. 

Cir­cle, the US com­pa­ny with a host of state licences which issues the USDC token, has been more pre­oc­cu­pied with its token briefly de-peg­ging from the dol­lar and . . .*checks notes*: the bank­ing indus­try desta­bil­is­ing cryp­to markets.

But there may be a new con­tender, TUSD, a sta­ble­coin that first came to mar­ket in 2018. Very lit­tle is known about it. It was launched by a com­pa­ny called Trust­To­ken, which announced in 2020 the own­er­ship of the sta­ble­coin will be mov­ing to an “Asia-based con­sor­tium.” Trust­To­ken was rebrand­ed as Arch­block last September. 

TUSD has a mar­ket cap of rough­ly $2bn, so small com­pared with Tether’s $83bn, but was recent­ly boost­ed by Binance’s deci­sion to include it in a zero-fee trad­ing offer to customers.

As of May 23, TUSD became the sec­ond-largest sta­ble­coin by dai­ly trad­ing vol­ume, out­strip­ping Circle’s USDC, which has spent the past few months ced­ing ground to competitors.

Column chart of TUSD trading volume on centralised exchanges ($bn) showing TUSD trading volume has skyrocketed in recent months, overtaking Circle's USDC

Crypto­fi­nance is edit­ed by Philip Stafford. Please send any thoughts and feed­back to

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