Hong Kong crypto crime soared to record levels in the first six months of this year, with one victim conned out of HK$124 million (S$22 million).
In recent years, cryptocurrencies have become a worldwide phenomenon, rapidly gaining in popularity and value. Unfortunately, this phenomenon has also caught the attention of crypto fraudsters who are always looking for new opportunities to defraud unsuspecting victims.
Traditional cyber fraud schemes, where crypto fraudsters use online contraptions to trick their victims in voluntarily transferring their money to third party bank accounts, present inherent risks for fraudsters. Law enforcement agencies and victims can trace, within the banking system and in the real world, where the funds have been electronically or physically and the persons involved can be relatively easily be identified with some efforts and expense. This is because the banking systems in most countries are mature and strongly regulated (especially anti money-laundering provisions).
On the other hand, regulations regarding cryptocurrencies and the platforms / exchanges that host them are completely new and underdeveloped, and law enforcement agencies around the world are unfamiliar with these issues and are slow at adapting to these new technologies.
The biggest Hong Kong crypto crime
In the biggest Hong Kong case so far, police said a 30-year-old man was scammed out of HK$124 million, after a group presented themselves as cryptocurrency consultants then disappeared with his money following the currency’s devaluation.
Hong Kong crypto crime, police has logged 496 such cases involving victims losing a total of HK$214.4 million in the first half of 2021. Across the whole of last year, total losses from 208 cases stood at HK$114.4 million.
There were also three local cases this year in which people were robbed or conned out of millions of Hong Kong dollars in face-to-face cryptocurrency transactions.
Chief Inspector Lester Ip Cheuk Yu, of police’s cyber security and technology crime bureau, stated Covid-19 pandemic was the factor behind rising crime levels in this area. People have also been staying at home more, which means they spend longer hours on the internet, so scammers have more avenues to approach them online.
According to police, cryptocurrency crimes tend to fall into one of three categories: using cryptocurrency for money laundering; online shopping fraud where buyers or sellers may be robbed during face-to-face transactions; or investment scams where sellers disappear after taking a victim’s money.
In this case of the 30-year-old merchant who lost HK$124 million, the victim was approached by two men and a woman in their 30’s introducing themselves as investment consultants. They recommended investing in Filecoin on the basis it would deliver big returns.Superintendent Wilson Fan Chun Yi
The victim handed over money in two installments in February and April. Filecoin’s share price dropped from US$168 (S$228) to US$73, prompting the victim in June to try and withdraw the cash. But the merchant could not contact the group and sought help from police.
Many residents don’t understand cryptocurrency, or overestimate their knowledge of it. In Hong Kong crypto crime, the crypto fraudsters targets victims aged 14 to 72. Younger people tend to fall victim to these scams because many of them purchase coins from cryptocurrency ATMs, whereas older people might not be technologically savvy enough to know how to use them.
Crypto fraudsters will often approach their victims through social media (Facebook and Instagram), online messaging platforms (e.g., WhatsApp, Line, WeChat), and dating applications. The fraudsters usually profile their victim first to assess if the person is a valuable target and then tailor their initial approach accordingly.
Hong Kong police has urged the public to do some research, steer clear of borrowing money to invest and not to blindly follow trends.Those suspecting they had fallen for a scam should call police immediately. One should take immediate action to avoid incurring additional losses.