Alibaba, payment firm will pay $600 million to resolve US probe
Chinese tech giant Alibaba Group Holding Ltd and its U.S. digital payment processor agreed to pay $600 million to resolve a federal investigation into whether they failed to prevent the sale and importation of illegal pharmaceuticals and controlled substances, the Justice Department said.
Alibaba entered into a non-prosecution agreement released Wednesday to end a probe of alleged violations of the Federal Food, Drug and Cosmetic Act, or FDCA, between 2016 and 2024, the U.S. said. The investigation was led by the Justice Department and the U.S. Attorney's Office in Rhode Island.
The U.S. is committed to "holding companies accountable when their platforms are used to facilitate the unlawful sale of illegal pharmaceuticals, related pharmaceutical equipment and other prohibited products in the United States," Charles C. Calenda, the first assistant U.S. Attorney in Rhode Island, said in a statement.
The settlement comes at a delicate time for Alibaba in the U.S. Last month, Anthropic PBC accused Alibaba of waging a large-scale effort to "illicitly" access its Claude AI model using fraudulent accounts in a bid to develop a rival chatbot, according to a letter Anthropic sent to U.S. lawmakers and White House officials. Alibaba also sued the Pentagon to seek its removal from a roster of Chinese military companies. That list has prompted several powerful lobbying firms to cut ties with Alibaba.
Alibaba said in an emailed statement the settlement will bring "stricter compliance to the sale of products in the United States by third-party merchants on its e-commerce platforms."
Overseas customers used Alibaba platforms to make 80,000 purchases of products that lacked approvals under U.S. drug, device or importation laws, the company admitted. Those purchases had a combined value of more than $200 million. The agreement didn't specify the products that people bought, but the Justice Department said they involved pharmaceuticals, regulated chemicals and drug counterfeiting equipment.
Alibaba admitted that it "failed to prevent some third-party sellers from circumventing controls and measures implemented by Alibaba.com and using Alibaba.com to sell and import goods" into the U.S. that violated the FDCA and other laws, according to the agreement.
U.S. agents also conducted more than 40 undercover purchases of drugs and equipment that were illegal for import into the U.S., the agreement said. At the same time, Alibaba employees "raised concerns" about compliance measures and filtering systems that failed to prevent the illegal sales, the company admitted.
The settlement also involves AUS Merchant Services Inc., a unit of Ant Group, which operates Alipay. AUS admitted its anti-money laundering program "failed to prevent some Alibaba merchants from using its payment processing and settlement services to facilitate the sale and importation of prohibited products into the United States," the U.S. said.
Alibaba will pay a criminal penalty of $125 million and forfeit $200 million, while AUS will pay a criminal penalty of $85 million and forfeit $190 million, the U.S. said.
AUS has made "continuous improvements to our compliance program and will continue to do so to ensure compliance with laws and regulations in all markets where we operate," a company spokesperson said in a statement.
"As one of the world's largest online retailers, Alibaba has an obligation to safeguard consumers from dangerous and illegal products, and to maintain integrity throughout its payment processes," said Jarod Koopman, chief of the Internal Revenue Service's Criminal Investigation division, one of several agencies that investigated the case.
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This story was originally published July 1, 2026 at 6:16 PM.