A Chinese organization previously accused by U.S. authorities of trafficking fentanyl precursor chemicals is now suspected of operating a large-scale cryptocurrency fraud scheme in Japan, according to an investigation published by Nikkei.
The report alleges that the group used a fake token called “zksync.jp” to lure investors and stole hundreds of millions of yen, equivalent to more than $1 million, from victims in Japan and overseas.
The findings connect two forms of illicit activity that increasingly overlap: international drug trafficking and cryptocurrency-enabled fraud.
Fake Token Exploited zkSync Brand Recognition
Investigators say the operation revolved around a fraudulent token and website using the name “zksync.jp,” which closely resembled Ethereum scaling network zkSync.
By incorporating Japan’s “.jp” country-code domain and a well-known crypto brand, the project appeared legitimate to unsuspecting investors. Victims were allegedly persuaded to transfer funds into the platform under the impression they were participating in a genuine crypto investment opportunity.
No evidence suggests that the legitimate zkSync protocol or its developers were involved in the scheme.
The alleged fraud appears to have been designed as an impersonation scam that capitalized on the credibility of an established blockchain ecosystem.
Japan-Based Firm Served as Operational Hub
At the center of the investigation is Hubei Amarvel Biotech, a Wuhan-based chemical manufacturer whose Chinese chemical company executives sentenced in fentanyl and crypto laundering case in the United States brought renewed attention to the group’s activities.
According to Nikkei, the organization operated in Japan through a company called Firsky KK, which was registered in Nagoya and presented itself as a Japanese-owned business.
Investigators believe the company acted as an administrative and financial hub for the broader organization. The firm reportedly handled logistics, financial management, and cryptocurrency activities before being liquidated in July 2024.
Nikkei’s reporting also identified a Chinese national known as Xia Fengzhi as a key figure overseeing operations from Japan, though his current whereabouts remain unknown.
The allegations also emerge as Japanese authorities intensify scrutiny of transnational financial crime networks operating in the country. Earlier this month, police arrested a senior executive linked to Cambodia’s Prince Group in a separate document fraud investigation, highlighting growing concerns over foreign-linked financial crime activities in Japan.
More Than 120 Crypto Transfers Raise Money Laundering Questions
Blockchain analysis conducted during the investigation reportedly uncovered more than 120 cryptocurrency transactions between wallets connected to the organization and entities sanctioned by the United States.
The transaction patterns have raised concerns that cryptocurrency may have been used to move or disguise proceeds derived from both drug trafficking and investment fraud.
Researchers cited in the report noted that Japan’s open financial system, extensive trade links with China, and active digital asset market could make the country an attractive jurisdiction for moving illicit funds.
The allegations have not resulted in criminal charges in Japan related to the cryptocurrency fraud claims, and the findings remain based on investigative reporting and blockchain analysis.
Crypto’s Expanding Role in Global Drug Networks
The case adds to a growing body of evidence showing that cryptocurrency has become deeply embedded in international narcotics supply chains.
U.S. prosecutors have repeatedly alleged that Chinese chemical suppliers accepted digital assets as payment for fentanyl precursors, including charges against China-based chemical manufacturing companies accused of supplying fentanyl precursors announced by the Justice Department.
Blockchain intelligence firms have also reported that a large majority of Chinese precursor manufacturers now accept cryptocurrency, enabling cross-border transactions outside traditional banking channels.
The case also adds to a broader pattern of law enforcement actions targeting cryptocurrency laundering networks. U.S. authorities recently dismantled the Audia6 laundering operation, another example of digital assets being used to move illicit proceeds across jurisdictions.
The alleged Zksync.jp scheme suggests that some criminal organizations are expanding beyond the use of digital assets as a payment rail and are increasingly using cryptocurrency itself as a vehicle for fraud and potential money laundering.
Japan Faces Growing Scrutiny
The revelations come as Japanese regulators are considering significant changes to the country’s digital asset framework, including proposals to classify cryptocurrencies as financial products and discussions around approving spot crypto exchange-traded funds.
At the same time, U.S. authorities have publicly identified Japan as a potential transit point in fentanyl trafficking investigations, placing additional scrutiny on the country’s role in cross-border financial and logistics networks.
If confirmed, the Zksync.jp operation would represent one of the most unusual intersections of organized drug trafficking and cryptocurrency fraud uncovered in Japan’s digital asset market to date.
