Federal prosecutors in the Southern District of Ohio have unsealed indictments against two Chinese pharmaceutical companies and six Chinese nationals, alleging their involvement in a fentanyl precursor supply chain that utilized cryptocurrency payments and sophisticated money laundering techniques. The charges are part of the FBI's "Operation Box Cutter," a broader initiative targeting international fentanyl networks.
The defendants, identified as Shandong Believe Chemical Company Pte Ltd. and Shandong Ranhang Biotechnology Co. Ltd. along with six individuals, are accused of marketing and selling chemical precursors and "cutting agents" used in the manufacture of fentanyl. Prosecutors specifically highlighted medetomidine, an animal tranquilizer described as a cutting agent that can increase the yield of a kilogram of fentanyl by at least twenty times, creating millions of doses. Three suspects are also accused of attempting to support a Mexican cartel designated as a foreign terrorist organization.
The indictment details a payment scheme where customers were directed to send cryptocurrency to wallets controlled by the defendants. Prosecutors described a "layering" pattern where stablecoins were first sent to a collection address, then split into pass-through wallets, and finally converted to fiat currency at a cross-border exit point. This case aims to pursue the entire supply chain, "from foreign suppliers and payment actors to distributors," according to U.S. Attorney Dominick S. Gerace II.
A supporting report from blockchain analytics firm TRM Labs found that approximately 97% of China-based drug precursor manufacturers accept cryptocurrency payments. The firm reported that on-chain inflows to these vendors reached about $39.1 million in 2025, up from roughly $34.7 million in 2024 and $30.9 million in 2023. If convicted, the defendants face potential life sentences for drug trafficking, with additional prison time for money laundering and terrorism-related charges.
