Amid Crypto-Boom, Chinese Gangs Using Market to Launder Drug Money

Amid Crypto-Boom, Chinese Gangs Using Market to Launder Drug Money

As the opioid epidemic rages on across North America, state and federal lawmakers have been pressing to bring forth legislation to address America’s growing substance abuse issues with provisions to standardize the delivery of addiction medicine and expand access to high quality care for affected citizens. In spite of increased focus in this regard, the access and availability to both prescription and illicit opioids remains arguably the largest contributing factor to an ongoing cycle that has claimed tens of thousands of lives while also contributing hundreds of millions of dollars to the illegal narcotics trade – this due in part to the cost of said drugs being cut down significantly with the development of synthetic alternatives to existing illicit drugs. Over the past several years a rather unlikely-yet-sinister partnership has formed between criminal organizations acting on opposite ends of the globe that have further compounded these issues domestically. Chinese gangs and Mexican drug cartels have continued to pair off to expand the respective reach of their destabilizing activities, laundering money and moving product into the United States while benefitting immensely from the state of disorder that remains at the southern border of the U.S. All told, Mexican drug operators are now acting as remote partners for various Chinese gangs in producing fentanyl and other illicit narcotics and later channeling the drugs from regional suppliers to dealers before ultimately reaching consumers across the southwestern portion of the United States and beyond.

Noticing the severity of the trend and the growing ties between Mexican and Chinese actors, in 2019 the U.S. government under former President Donald Trump and the U.S. Drug Enforcement Administration (DEA) sought to disrupt operations of this variety by pressuring China into banning fentanyl, with President Xi following suit with a major crackdown that saw an uptick in regulation on the drug. This paradigm shift ultimately lead to the class-scheduling of fentanyl which effectively decreased the amount of the drug allowed to be exported from the Republic. In response, well-equipped Chinese labs that had been creating these synthetic drugs attempted to work around the new restrictions, shifting their operations to creating only the precursor ingredients needed to develop the final product. Many of the chemicals being manufactured in China for the sole purpose of producing synthetic opioids such as fentanyl have continued to be purchased at high rates by Mexico’s notorious drug cartels in transactions facilitated by a global network of Chinese criminal groups, allowing for the trade to continue, albeit in a more fragmented state.

While the Mexican government is essentially powerless to stop the cartels in their own country, the Chinese government certainly is better suited to hinder their domestic gang activity. With that being said, many have speculated as to whether or not China is allowing this criminal activity to continue to occur on purpose to harm their western counterparts. That is the question that American lawmakers are now asking as representatives of several government agencies have called for an investigation as to whether the Chinese Communist Party is complicit in the schemes of the triad gangs and, by extension, the Mexican cartels. China rarely misses an opportunity to undermine the U.S. whenever possible, this as they continue to engage in state-sponsored spying practices and have been behind several large-scale hacking and malware attacks on U.S. targets over the past decade. More recently, China has had the gall to publicly state that the fentanyl crisis is caused by Americans’ unrelenting demand for the drug – not their own inability (or unwillingness) to truly stop the drug production occurring within their own borders.

“The crisis in the U.S. is not manufactured by China; rather, its roots lie within the United States itself,” said Yu Haibin, who is deputy director general of the Ministry of Public Security’s Narcotics Control Bureau and deputy secretary-general of the National Narcotics Control Commission in January of 2024.

The U.S. State Department estimates that upwards of $154 billion in illicit funds pass through China each year, demonstrating that their criminals are more than capable when it comes to moving money. Before the partnership with their Chinese counterparts began nearly a decade ago, Mexican cartels had run into numerous issues in both moving and subsequently laundering the money they would make from their cross-border sales, with the process also proving costly and time-consuming while riddled with inherent risk of seizures and gang-on-gang violence resulting in loss of funds (and often life) for the cartels. With the Chinese now handling much of the laundering on their behalf, the success of Mexican efforts have improved dramatically and the risk of detection by authorities on behalf of the cartels reduced considerably, making the pairing a win-win for both parties. In the new system, the cartels have near instant access to their washed funds once their sales are made, and money never moves across any borders where it is possible for it to be detected and/or seized. Instead Chinese gangs receive a dropped amount of cash that is later purchased by wealthy individuals from China, effectively trading American dollars for Chinese Yuan and laundering these funds on behalf of the triads in the process. The success of this practice is largely backed by a significant demand for this service by Chinese elites seeking to build their fortunes from beyond the lens of the Chinese government which limits its citizens from transferring more than $50,000 out of the country on a yearly basis.1 With the strong oversight the Chinese communist government has over its economy and its people in general however, U.S. officials remain extremely skeptical that all of these large-scale illicit transfers have gone unnoticed.

Recent reports have also indicated that Chinese organized crime groups profiting from their  foreign partnerships are using new methods to launder billions of dollars in cryptocurrency, further impacting the integrity of the global financial system. The Wall Street Journal wrote last week that Chinese gangs are now exploiting the decentralized nature of cryptocurrency markets to launder proceeds of their drug trade and other illicit ventures to better evade the grasp of Chinese and foreign authorities, this in spite of bans on crypto trading and mining in China since 2021.2 This shift to crypto is likely to further propel the success of the illicit drug trade at the international level and become an even greater roadblock in the ongoing battle against money laundering by the world powers. 


  1. Pleasance, Chris. “How China Is Helping Mexico’s Cartels: Criminals ‘with Links to the Communist Party’ Are Laundering Millions in Drug Money for Gangsters Including El Chapo’s Sinaloa Clan as They Flood the US with Killer Fentanyl.” Daily Mail Online, Associated Newspapers, 29 Apr. 2023. 
  2. Soon, Weilun, and Elaine Yu. “Chinese Gangs Use Cryptocurrencies to Launder Billions – WSJ.” The Wall Street Journal, 2 Mar. 2024. 

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