Suspect Arrested in Hong Kong for Scamming Crypto Trader out of HK$1.5M

On Tuesday, a Hong Kong man was arrested for stealing HK$1.5M from a female trader in Tsim Sha Tsui, an urban district in southern Kowloon, Hong Kong.

A 24-year-old man was arrested by Hong Kong police Tuesday for allegedly stealing funds from a Hong Kong citizen, an offense punishable by up to ten years in prison. The suspect allegedly lured the victim and two colleagues into the meeting room of a shop in Tsim Sha Tsui, where the victim transferred $HK1.5M (US$191,085) to an e-wallet. The suspect then exited the premises under the pretense that he would get cash for the victim. The victim and her colleagues then discovered they were locked in and called the police, who tracked down the victim on Tuesday in Sham Shui Po in northern Kowloon.

The police have not recovered any money but seized some of the suspect’s personal effects from the bogus shop, which had been rented under the name of a shell company. “Inside the shop, the banknote counter was not connected to electricity. What looked like computers were just empty cases,” said Inspector Tong Sin-tung of the Yau Tsim criminal investigation unit on Wednesday.

Police urge caution

Tong urged citizens to be cautious when engaging unknown persons for financial transactions and to use trustworthy platforms. In a separate incident occurring in June 2021, a man was cheated out of HK$124M  by two men and a woman promising enormous returns for an investment in a cryptocurrency called Filecoin. When the victim discovered that he could not withdraw his funds following a crash in the price of Filecoin and the so-called investors were nowhere to be found, he alerted authorities.

Cryptocurrency crimes, especially those involving money laundering, are nothing new in Hong Kong. Criminals convert the money to cryptocurrency to enable fast cross-border transactions. Since an anti-fraud law enforcement division was set up in July 2017, authorities estimate that local and international scammers’ $3.72B worth of ill-gotten gains passed through Hong Kong bank accounts and cryptocurrency wallets. Police were able to intervene in about 31 percent of those transactions. At the same time, HK$19.94B remains out of their reach in the hands of international criminals. “Deception victims are deceived to transfer cryptocurrency to the e-wallets provided by the culprits directly,” said the police. In response, the former British colony requires all cryptocurrency trading platforms to be registered with a local watchdog and comply with anti-money laundering and counterterrorism financing rules.

Anti-money laundering in sharp focus since last year

Money-laundering checks have landed some companies in hot water. In the U.S., the Office for the Comptroller of the Currency withdrew its approval of Anchorage Digital Bank’s federal charter as a cryptocurrency custodian and service provider to retail investors, citing inadequate anti-money laundering measures in April 2021. In August, a few months later, BitMex was slapped with a $100M fine by the Commodities and Futures Trading Commission for its failure to carry out sufficient anti-money laundering policies.

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