Alibaba and Alipay US agree to $600 million resolution over alleged illegal-drug sales

Alibaba Group Holding Limited and AUS Merchant Services Inc., formerly known as Alipay US, have entered non-prosecution agreements with the Justice Department and agreed to pay $600 million to resolve allegations involving the sale and import of illegal pharmaceuticals, controlled substances, listed chemicals and pill presses through online marketplaces.

The Justice Department announced the resolution July 1, saying the alleged sales involved Alibaba.com and AliExpress.com. The department said the companies failed to prevent merchants from using those platforms to sell and import the products into the United States.

The agreements resolve allegations rather than establish that every alleged violation was proven at trial. The resolution is not a criminal conviction, and the allegations do not mean that all products sold through either platform were unsafe or unlawful.

What the investigation found

Federal investigators conducted more than 40 undercover purchases during the investigation, according to the Justice Department. Those purchases concerned products within the categories identified by the department: illegal pharmaceuticals, controlled substances, listed chemicals and equipment used to make pills.

The department’s announcement focused on the companies’ alleged failure to prevent merchants from selling and importing those products. It did not establish that Alibaba or AUS knowingly sold every illegal product described in the allegations.

AUS Merchant Services was identified in the announcement as formerly Alipay US. The department later updated its announcement to clarify that AUS is a subsidiary of Ant Group.

Compliance measures included

In addition to the $600 million payment, the resolution includes compliance measures intended to strengthen oversight of merchants and products on the relevant services. The measures address the controls used to monitor marketplace activity and potentially dangerous products entering the United States.

That makes the case broader than a financial resolution alone. It targets how online marketplaces and a related payment-services company are expected to identify and prevent transactions involving products that federal authorities say can pose public-health and safety risks.

The Justice Department and the U.S. Attorney’s Office for the District of Rhode Island handled the resolution. The alleged conduct involved products sold or imported into the United States, giving the case national implications for e-commerce platforms, payment processors and consumers who rely on online marketplaces.

Largest Rhode Island resolution

The Justice Department described the agreement as the largest monetary settlement in the history of the District of Rhode Island. The department’s announcement used that description while also characterizing the companies’ agreements as non-prosecution agreements and the payment as a resolution of allegations.

The distinction matters: the companies agreed to resolve the allegations without the packet establishing a trial finding or criminal conviction. The available announcement provides the amount, investigative step and compliance framework, but it does not identify a separate same-day independent report with additional substantive facts.

What happens next

The compliance measures are the central forward-looking element identified in the announcement. They are intended to strengthen oversight of merchants and products on Alibaba.com and AliExpress.com after the federal investigation.

The approved information does not specify a separate implementation deadline or additional court date. For now, the documented development is the July 1 agreement: a $600 million non-prosecution resolution tied to allegations about marketplace and import controls, supported by more than 40 undercover purchases and accompanied by measures intended to improve oversight.