According to research published by Nikkei, a China-based structure previously associated with the supply network of fentanyl precursor chemicals may also be linked to a crypto fraud scheme operated through Japan. The news claimed that the group used Japanese internet domains and a fake token called “Zksync.jp” to attract investors from around the world.
Fake token claim and investor losses
According to the research, the token in question closely imitated the brand identity of ZKsync, the Ethereum Layer 2 network developed by Matter Labs. However, there was no indication in the news that the legitimate ZKsync project was linked to this scheme. Nikkei wrote that investor losses reached hundreds of millions of yen, with total losses exceeding $1 million.
It was reported that the token, named Zksync.jp, was presented with an appearance very similar to the known ZKsync ecosystem, and that this similarity was used to create investor confidence.
The news stated that choosing a domain name with a Japan extension gives the platform an additional appearance of reliability. Because domain name registration rules in Japan generally require a local address. It was stated that this situation contributed to the fake investment opportunities appearing more believable.
Mini dictionary: Domain name is the web address of a website that users see. Domain names with country extensions may be perceived as more reliable by some users because they are associated with a specific jurisdiction.
Companies at the focus of the investigation
Nikkei pointed to Wuhan-based chemical company Hubei Amarvel Biotech as a key element of the broader network. The news also claimed that the Nagoya-based company Firsky served as a front for this structure in Japan. It was claimed that Chinese citizen Xia Fengzhi was involved in logistics activities and money movements through a Japan-related company.
It was shared that Firsky was liquidated in July 2024. It was stated that Xia Fengzhi’s current whereabouts are unknown. The publication of the study follows the conviction of two Amarvel Biotech executives in the US on conspiracy charges related to fentanyl precursor chemicals and money laundering.
Sanctioned links in blockchain records
According to the news, Nikkei monitored cryptocurrency transfers associated with Amarvel and the Japan-related network using wallet addresses listed in the US case files. The investigation identified more than 120 crypto transactions linked to parties under US sanctions.
It was reported that a significant part of the transaction traffic was concentrated around parties related to Wuhan Yuancheng Group, which was previously mentioned in sanctions and enforcement practices related to drug trafficking allegations in the USA. Blockchain analysis company Chainalysis also stated in its evaluation to Nikkei that fraud schemes try to attract users by using domain names belonging to jurisdictions deemed trustworthy.
New regulation preparations in Japan
On the other hand, it has been reported that the Japanese parliament is preparing to adopt a new bill that will bring crypto assets into a similar regulatory framework as shares. The bill envisages stricter transaction rules and lower tax rates when classifying crypto assets as financial instruments.
The research in question also raised new questions about how cross-border crypto transactions and domain infrastructure can be used together in schemes targeting investors.
