As the US opioid epidemic continues to wreak havoc across the nation, an unlikely accomplice has emerged: cryptocurrency. While many may initially find this connection puzzling, it is important to understand how the unregulated and anonymous nature of cryptocurrency has played a significant role in the opioid epidemic. This dark side of crypto has largely gone unnoticed but is a significant factor in the ongoing opioid crisis.
The opioid epidemic refers to the mass addiction to prescription painkillers and illicit opioids such as heroin and fentanyl that has swept through the US over the last two decades. According to the Centers for Disease Control and Prevention, over 450,000 people have died from overdoses involving opioids since 1999. The epidemic has been fueled by a range of factors, including the over-prescription of opioids by doctors, insufficient regulations, and inadequate monitoring of prescription drugs.
Cryptocurrency has played a key role in the epidemic by facilitating the flow of illicit opioids into the US. Transactions conducted through cryptocurrency are far harder to trace than those made through traditional payment systems. This opens up opportunities for drug dealers to sell their products anonymously and evade law enforcement.
One of the primary ways in which cryptocurrency has been used in the opioid trade is by facilitating drug purchases on dark web marketplaces. These marketplaces are often accessed through Tor, a web browser designed to enable users to browse the internet anonymously. On the dark web, vendors sell illicit opioids such as fentanyl and heroin, along with other drugs, weapons, and counterfeit currency. These marketplaces frequently use Bitcoin and other cryptocurrencies as the payment method, allowing users to conduct anonymous, untraceable transactions.
The anonymity afforded by cryptocurrency has made it much harder for law enforcement to crack down on the dark web marketplaces that are fueling the epidemic. While law enforcement agencies have had some success in shutting down these marketplaces, new ones continue to spring up, making the process of tracking down and apprehending the people behind them an ongoing challenge.
Moreover, cryptocurrencies are often used to launder the profits made from illicit opioid sales. By converting cryptocurrencies into fiat currencies, drug dealers can avoid detection by the authorities. This means they can continue to operate with relative impunity, profiting off the suffering of the addicts they are supplying.
It is not just dark web marketplaces that are facilitating the flow of illicit opioids into the US. Illicit opioids are also often smuggled across borders, and cryptocurrency is now being used to pay for these shipments. In 2018, a Chinese national was apprehended in the US for smuggling fentanyl into the country and accepting payments in Bitcoin. This case highlights how cryptocurrency is being employed as a means of payment in the illegal trade of opioids.
Finally, cryptocurrency has also been used to fund the development and production of synthetic opioids, including fentanyl. These synthetic opioids, which are far more potent than traditional opioids, are responsible for a growing number of overdoses in the US. By financing the production of these drugs through cryptocurrency, dealers can avoid the scrutiny of law enforcement agencies and continue to profit from the epidemic.
While cryptocurrencies may not be responsible for creating the opioid epidemic, their anonymous and untraceable nature has undoubtedly contributed to its spread. Law enforcement agencies are struggling to keep up with the use of cryptocurrency in the opioid trade, and as long as this trend continues, the epidemic will continue to ravage communities across the country.
One potential solution to this problem is to increase regulation of cryptocurrencies. Currently, the US government has little control over the cryptocurrency market, but greater regulation could help to reduce the anonymity of transactions and make it harder for drug dealers to operate in the space. Moreover, greater collaboration between different law enforcement agencies could help to better track and shut down dark web marketplaces and other channels used to distribute illicit opioids.
In conclusion, the role of cryptocurrency in the US opioid epidemic cannot be understated. From facilitating drug purchases on dark web marketplaces to funding the development and production of synthetic opioids, cryptocurrency has made it far easier for drug dealers to operate with relative impunity. Addressing this issue will require a concerted effort from law enforcement agencies, government, and the public. If left unchecked, the trend is likely to continue to fuel the epidemic and lead to further loss of life throughout the country.
This week’s FT Cryptofinance newsletter discusses the use of cryptocurrencies in the fentanyl epidemic in the US. According to a study by blockchain analytics firm Elliptic, 90% of Chinese suppliers of chemical ingredients used to manufacture fentanyl accept cryptocurrency payments. The cryptocurrency wallets used by these companies have received over $27m, enough to purchase ingredients that could produce fentanyl pills with a street value of $54bn. Fentanyl has replaced legally prescribed painkillers as the leading cause of drug overdose deaths in the US. The article raises concerns about the harmful impact of cryptocurrencies and whether this will change the mind of regulators and policymakers about their adoption. Other topics covered in the newsletter include the increase in UK losses to crypto fraud, Iosco’s push to break up crypto companies with conflicts of interest, and Bhutan’s investment in bitcoin mining. The newsletter concludes with a look at TUSD, a stablecoin that has recently become the second-largest by daily trading volume.