Hong Kong Police crackdown on cryptocurrency scam involving counterfeit currency

Authorities in Hong Kong have noted an increase in counterfeit banknotes being put into circulation through cryptocurrency scams.

According to a local report, Hong Kong police seized 3,396 counterfeit banknotes between January and April 2024. The total face value of the counterfeit coins was HK$2.55 million, or approximately $326,130.

Specifically, only three cryptocurrency scams and frauds were responsible for the majority of these frauds in circulation.

In one such case, a fraudster was seen setting up a fake cryptocurrency for a vault in Tsim Sha Tsui. An unsuspecting woman fell victim to this scammer when she exchanged HK$1 million for Tether’s USDT stablecoin. The fraudster nabbed the crypto funds and the woman was left with HK$1,000 in fake bills.

Using a similar tactic, HK$1 million was stolen from another person and the fraudster made off with the man’s USDT.

According to the latest report, Hong Kong police seized 1,693 “education notes” and 347 low-quality counterfeit notes linked to these scams. Training notes are used to train bank staff and look very similar to real currency.

Police detained 3 people related to this fraud. The funds were seized.

Earlier this year, Hong Kong police also seized 3,000 hell notes, a safe and a banknote counting machine from a cryptocurrency exchange in the same Tsim Sha Tsui district.

Hell notes are used as offerings to ancestors or gods in traditional Chinese rituals. These look very similar to real currency.

As of now, authorities have asked the public to hand over counterfeit banknotes to the police or risk committing the “crime of distributing counterfeit banknotes.”

Recently, Hong Kong police have also noticed a significant increase in cryptocurrency-related crimes. Crimes involving cryptocurrencies increased from 2,336 cases to 3,415 in one year.

As a result, funds worth $553 million were lost.

The fraud essentially consisted of two different tactics.

In the first scenario, scammers will try to persuade victims to transfer money to their wallets. This is often seen in pig slaughter scams.

As reported by authorities, scammers are also reportedly using overseas crypto exchanges, further complicating the monitoring process.

The other scenario involved scammers relying on the hype around cryptocurrencies. With cryptocurrencies becoming a hot topic in finance, scammers often take advantage of their lack of understanding to defraud their victims.
This increase in crypto crimes in the region has led to increased scrutiny. Hong Kong’s securities regulator has established a licensing regime for crypto service providers.

On the other hand, Chinese officials promised to work together with the United Arab Emirates (UAE) to fight cybercrime.