This is part of Trump’s Great American Crypto Scam, a series about the catastrophic collision between the second Trump administration and the wild world of cryptocurrency. Read it all here.

According to Donald Trump, there’s a simple reason that the United States has had to impose economy-exploding tariffs against Canada: fentanyl. Although only a soup can’s worth of the unusually deadly synthetic opioid has been discovered by agents at the U.S.–Canada border so far this year, the president insists that a “massive” amount of the drug is being trafficked into America from the north—and that until this possibly imaginary flow of “poison” is halted, punitive measures against imports will continue.

The same, he says, goes for tariffs on Mexico. Trump’s long-standing belief is that fentanyl is smuggled into the U.S. largely by undocumented migrants, and that this flow will, accordingly, be cut off if the southern border is “secured.” His tariffs, he says, have the goal of forcing the Mexican state to take measures like deploying its national guard to intercept migrant “caravans.”

But this premise doesn’t hold up either. It’s true that fentanyl generally enters the U.S. from the south, but when law enforcement discovers the drug being smuggled, it’s almost always in the possession of American citizens attempting to cross through official ports of entry. It’s rarely found, by contrast, by border agents apprehending migrants who are attempting to enter the country undetected through the desert. And given how many of these individuals have been taken into custody in recent years—literally millions of them—we’d almost certainly know by now if they were a major vector for trafficking.

In other words, blindsiding the Canadian aluminum industry and building a wall on the border might not be the most effective ways to reduce the amount of fentanyl that ends up inside the U.S. One that might have promise, though, is regulation and scrutiny of cryptocurrency.

Why is that? Well, the point of cryptocurrency is that it’s not controlled by governments or banks—the gatekeepers of the traditional financial system. Its more idealistic proponents believe that’s a good thing, because it’s not subject to manipulation by self-interested elites. Its less idealistic users realized immediately that the whole “not monitored by governments or banks” aspect makes crypto platforms a great medium for transactions that involve weapons, terrorism, stolen money, and hard drugs like fentanyl.

Various official reports and journalistic investigations have documented how the system works. Fentanyl’s “precursor” chemicals are largely manufactured in China, then shipped to Mexico, where they’re combined in laboratories controlled by cartels before being moved north. When the cartels pay their Chinese suppliers, they increasingly do so by using cryptocurrency.

Some of the crypto exchanges in which these transactions have been conducted, according to watchdog groups and law enforcement, include major platforms like Tron, Binance, and the infamous, now-defunct drug marketplace Silk Road. (Tron did not respond to multiple requests for comment on this article. Binance has admitted in legal filings that it was culpable for failing to prevent illicit activity, and Silk Road founder Ross Ulbricht was convicted in 2015 of facilitating illegal commerce in federal court.)

Another thing those platforms and their proprietors have in common are connections to Donald Trump, in his roles as both the president of the United States and an active participant in the crypto business.

Trump wasn’t always a fan of crypto. As recently as 2021, he was referring to Bitcoin, the most well-known type of cryptocurrency, as “a scam.” At the time, some elected Republicans were crypto boosters, but others were involved in bipartisan efforts to regulate the industry.

As Trump geared up for his 2024 presidential campaign, though, he realized that crypto was popular in the so-called manosphere of right-leaning podcasters, video-game streamers, and mixed martial arts enthusiasts through which he sought to reach young male voters. In seeking the support of these crypto enthusiasts, he made big promises about promoting the industry. He pledged, among other things, to enshrine a “national Bitcoin reserve” and to replace Securities and Exchange Commission Chair Gary Gensler, who had been trying to apply the same laws to crypto companies that already apply to firms trading in conventional securities.

Trump has followed through on those promises. His pending nominee to replace Gensler, Paul Atkins, is a longtime member of a “cryptocurrency advocacy organization” called the Token Alliance. His top adviser on A.I. and crypto issues, an associate of Elon Musk’s named David Sacks, is himself a major crypto investor. And last fall, Trump and his family joined forces with a former colon-cleanse salesman named Chase Herro to launch a crypto business called World Liberty Financial, which issues its own token (i.e., unit of cryptocurrency) called WLFI.

Thus far in Trump’s term, the result has been a very forgiving environment for crypto enforcement—and, indirectly, fentanyl payment networks.

One of Trump’s very first moves in office, in fact, was pardoning Ulbricht, the Silk Road founder. The symbolism is striking: On a recent Vox podcast, Ulbricht biographer Nick Bilton described Silk Road’s facilitation of Bitcoin-denominated Chinese fentanyl shipments in the early 2010s as a key step in the drug’s apocalyptic takeover of the U.S. opioid market. “It gets to a point where Ulbricht is making so much money, and so much is being sold on Silk Road, that it captures the attention of people in China who were starting to make fentanyl at the time. Silk Road enabled them to mail fentanyl to the U.S.,” Bilton said. “You start to see the beginning of the fentanyl epidemic, and the first people affected by it are kids.”

Even before Trump was sworn in, meanwhile, a Chinese American entrepreneur named Justin Sun—the founder of Tron, which operates a crypto-transaction platform and also issues its own tokens—announced that he’d bought $30 million of World Liberty Financial’s token and joined the company as an adviser. According to Bloomberg News, the investment may have triggered a $15 million payout to the Trump family.

Observers immediately noted that Sun was facing civil charges, filed by the SEC, of pump and dump–style market manipulation involving two crypto tokens. (Tron has maintained that the charges of market manipulation lack merit, and Sun told Bloomberg that there was no “political purpose” behind his purchase. The company did not respond to Slate’s requests for comment about the SEC suit, the World Liberty purchase, or any of the other issues raised in this piece.) The Tron platform, multiple reports have noted, is also used frequently by criminal groups including, but not limited to, fentanyl manufacturers. A report by a firm called Elliptic identified millions of dollars’ worth of transactions conducted on Tron between Mexican drug cartels and Chinese manufacturers who make fentanyl’s “precursor” ingredients, while a November 2023 article in Reuters reported that Tron had overtaken Bitcoin’s network as the platform used most commonly for crypto transfers by Hamas and Hezbollah. All told, a report about 2023 crypto activity published by a crypto security firm called TRM Labs found that the Tron platform hosted an estimated 45 percent of all illicit worldwide blockchain transactions in 2023. The same report noted that the volume of drug sales on Tron had “more than quadrupled from the year before.”

In late February, the SEC—now controlled by Trump—filed a request with a judge to halt Sun’s prosecution, a move that signals that a negotiated settlement or a dismissal of charges is imminent.

Two weeks later, the Wall Street Journal reported that representatives of the Trump family have held discussions about taking a stake in another crypto exchange, Binance, which was banned from operating in the U.S. in 2019 over allegations that it was circumventing money laundering laws. In 2023 the company’s founder, Changpeng Zhao, pleaded guilty to money laundering violations and served four months in prison. According to the Journal, Zhao also currently happens to be “pushing for the Trump administration to grant him a pardon.” Binance executives, the Journal writes, view Sun’s case as a “legal playbook” that they hope to use in order to regain access to the U.S. market. (Zhao wrote on Twitter/X that “no felon would mind a pardon” but that he had not been involved in any discussions about the Trump family’s potential investment in Binance.)

The U.S. initially investigated Binance, official documents state, in part for its role in transactions involving “illegal narcotics and controlled substances.” In communications obtained by the government, a member of the company’s “compliance” staff once semi-facetiously suggested advertising its services to users who felt that “washing drug money” on other platforms had become too difficult. (In 2023 Department of Justice indictments of a number of alleged China-based drug manufacturers named Binance as a platform used for transactions involving “fentanyl and methamphetamine.” In 2024 Forbes reported that a Drug Enforcement Administration investigation of fentanyl manufacturers targeted a Chinese entity that used a Binance account to conduct transactions.)

Tron has previously disputed the notion that it bears responsibility for transactions that take place on its platform. The company told Reuters in 2024 that it does not have the ability to control the behavior of individuals using its product, and in 2023 noted to the same outlet that any technology can “in theory be used for questionable activities.”

To explain: According to published reports, illicit transactions on the Tron platform are typically conducted using a crypto token called Tether. And Tron does not issue or control the Tether token. Roughly speaking, if you Venmo a friend $20 for pizza, the crypto equivalent of the money in that exchange are the tokens, and Venmo is the equivalent of the platform. The issuer of a token can freeze a transaction it deems to be suspicious, but a platform can’t.

Platforms can report suspicious transactions to law enforcement, though, and can take so-called know-your-customer precautions, which enable them to identify users whose patterns of activity indicate potential illegality. On that front, Tron announced an agreement in September 2024 to collaborate with Tether and TRM Labs, the aforementioned security firm, to “combat illicit activity.” The three entities subsequently said in a joint statement that they had frozen $130 million in suspicious transactions in their first four months of work, while a separate TRM annual report credited Tron with cutting down the volume of illicit exchanges on its platform in 2024. That report, however, still estimated that more than half of 2024’s worldwide illicit crypto transactions—which it said could amount to $75 billion in total—“occurred on the TRON blockchain.”

The United States, for its part, could pass laws requiring crypto companies to take precautions. In 2023, in fact, Massachusetts Sen. Elizabeth Warren and Republican Kansas Sen. Roger Marshall introduced a bill called the Digital Asset Anti-Money Laundering Act, which would have extended the know-your-customer laws that govern bank activity to the world of crypto. Essentially, KYC laws require financial institutions to take steps to actively prevent criminals from using their systems; if they don’t, they can be prosecuted.

But in July 2024, Marshall withdrew his sponsorship of Warren’s bill—and now, with Trump’s win, the chances that the U.S. passes laws subjecting any crypto entity to strict oversight seem slim.

Earlier this month, for instance, the (Republican-controlled) Senate Banking Committee voted to advance a bill called the GENIUS Act, which would formalize the regulation of a subset of cryptocurrencies known as stablecoins. Republican South Carolina Sen. Tim Scott, the committee’s chair, says that the bill will ensure that the tokens are “safe and reliable tools in the financial system.” Warren disagrees. In a statement to Slate, she warns that the bill fails to hold a number of entities that deal with stablecoins to the same standards to which other financial institutions are subject—and that it would essentially encourage large companies that are not subject to banking regulations, like Musk’s X, to issue their own currency. (Musk has said he would like X to become an “everything” app on which users can make financial transactions.)

“Instead of making it easier for Elon Musk and the Trump Organization to control our money, Republicans should work with Democrats to prevent the exploitation of cryptocurrency to traffic fentanyl into America,” Warren said. “We can start by fixing the real problems with the GENIUS Act that make it even easier for cartels and other bad actors to move dirty money—and make it harder for law enforcement to crack down on deadly networks.”

Warren’s advocacy aside, tail winds appear favorable right now for illicit actors—including the manufacturers and distributors of fentanyl—using crypto networks. “I always try to get across that by the time you get to the border, it’s too late,” said Regina LaBelle of Georgetown’s O’Neill Institute for National and Global Health Law, who served as acting director of the Office of National Drug Control Policy during the Biden administration. According to LaBelle, even the few laws that do currently govern crypto transactions are not enforced as vigorously or uniformly as they might be. “If the focus is going to be on deregulating crypto even more than it already is, that could spell trouble,” she said. “If there’s more anonymity, then there’s more opportunity for criminal networks to use crypto for drug trafficking.”

Donald Trump, though, isn’t one for looking too closely under the hood of things. His embrace of crypto may have been politically strategic, but indifference to where his customers, business partners, and political allies get their money has long been one of his guiding principles. A 1991 piece in the Village Voice noted that tenants of Trump’s signature Fifth Ave. Trump Tower property included felons convicted of investment fraud, Medicaid fraud, cocaine trafficking, tax evasion, and running a gambling ring for the Lucchese crime family. In 2012 Trump launched a hotel project in Azerbaijan in partnership with a local kingpin who is believed to have laundered money for the Iranian Revolutionary Guard, which the U.S. designates as a terrorist organization. Other recent Trump real estate partners and investors include a convicted Colombian narcotics trafficker, numerous suspected organized crime figures from the former Soviet Union, and a mob-affiliated Russian American who was once convicted of stabbing a man in the face.

In theory, in other words, Trump believes that terrorists and drug traffickers should be treated harshly—but in practice, he’s always been a little more flexible. While he might have been elected because voters wanted to see bigger numbers in their bank accounts, the next four years will likely be boom times for the kind of money that moves off the books too.

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