A Chinese criminal organization, previously convicted for exporting fentanyl precursors, has been linked to a major cryptocurrency fraud in Japan. According to an investigation by Nikkei, the group operated a scam token under the domain zksync.jp, which closely imitated the legitimate zkSync (ZK) Ethereum Layer 2 project. The fraudulent token tricked global investors out of hundreds of millions of yen (over $1 million), leveraging the reputation of the well-known blockchain platform.
The scheme was run through a Japanese front company, Firsky, based in Nagoya, and directed by a figure identified as Xia Fengzhi. Hubei Amarvel Biotech, the Wuhan-based chemical manufacturer behind the fentanyl precursor exports, used wallet addresses disclosed in U.S. court evidence to move funds. Blockchain analytics by Chainalysis and TRM Labs revealed over 120 transactions with entities sanctioned by the U.S. Treasury’s OFAC, suggesting a money laundering network that funneled proceeds from both drug trafficking and crypto fraud. The zksync.jp domain was registered in 2023, exploiting Japan’s credibility to make the scam appear legitimate.
The case underscores the convergence of opioid-linked crime and crypto-enabled financial fraud, prompting calls for tighter domain regulations and stronger international cooperation. Japanese regulators are already working to expand the country’s regulated crypto market, with a recent cabinet bill to reclassify crypto as financial products and potential ETF approvals by 2028. The incident serves as a stark reminder for investors to verify the authenticity of crypto projects, especially those using unfamiliar domain extensions.
