According to a recent investigation by Nikkei, a China-based group previously linked to the supply of fentanyl precursor chemicals may also be connected to an international cryptocurrency scam operating through Japan. The report claims that the group attracted investors worldwide using Japanese internet domain names and a counterfeit token called “Zksync.jp.”
Fake token allegations and investor losses
The investigation revealed that the token in question closely imitated the branding of ZKsync, an Ethereum Layer 2 network developed by Matter Labs. However, no evidence was found to suggest that the legitimate ZKsync project was involved in the scheme. Nikkei estimated that investors lost hundreds of millions of yen, pushing the total loss above $1 million.
The so-called Zksync.jp token was presented with a look and feel nearly identical to the actual ZKsync ecosystem, leveraging this similarity to gain investor trust.
The report noted that opting for a Japanese domain extension helped create an image of extra legitimacy for the platform, as registering such domains typically requires a local address in Japan. This contributed to the fraud’s credibility by making the fake investment opportunity appear more convincing to potential victims.
Mini glossary: A domain name is the web address users see for a website. Country-specific domains are often perceived as more trustworthy because they are associated with a particular jurisdiction.
Companies at the center of the investigation
Nikkei identified Wuhan-based chemical company Hubei Amarvel Biotech as a key part of a wider network. The report also alleged that Nagoya-based firm Firsky served as a shell company for the network’s activities in Japan. Chinese national Xia Fengzhi was said to have handled logistics and financial transactions through a Japan-linked entity.
Firsky was dissolved in July 2024, and Xia Fengzhi’s current whereabouts are reportedly unknown. The publication of the investigation follows the conviction in the United States of two Amarvel Biotech executives for conspiring to traffic fentanyl precursors and commit money laundering.
Sanctioned ties found in blockchain records
According to the report, Nikkei traced crypto transactions connected to Amarvel and the Japan-affiliated network using wallet addresses named in US court cases. More than 120 transactions were identified as linked to entities under US sanctions.
A significant portion of these transactions was associated with parties linked to the Wuhan Yuancheng Group, previously sanctioned by US authorities for alleged involvement in drug trafficking operations. Blockchain analytics firm Chainalysis told Nikkei that fraud rings increasingly exploit domains from reputable jurisdictions to lure victims.
Japan prepares for new crypto regulations
Meanwhile, Japan’s parliament is reportedly set to approve a new law that will give cryptocurrencies a regulatory framework similar to that for equities. The bill aims to classify crypto assets as financial instruments, tighten transaction rules, and lower tax rates for trading profits.
The findings of this investigation have raised fresh questions about how cross-border crypto transactions and domain infrastructure are combined in schemes targeting investors.
