Hong Kong fake money case shows convergence of crypto and real world crime
Another week, another weird crime in Hong Kong involving crypto.
In the latest incident, three individuals were arrested for defrauding a businessman of US$400,000 in Tether (USDT) at an office in Mong Kok, a densely populated market district in Hong Kong.
The police seized over 11,000 counterfeit bank notes during the raid, more than the total number of fake notes seized for the entirety of last year, according to the South China Morning Post.
The case is just the latest to show how crypto crime is creeping into traditional malfeasance.
Chengyi Ong, Chainalysis’ head of policy for the Asia Pacific region, or APAC, said that she’d seen crypto involvement in cases ranging from narcotics to fraud and scams to cybercrimes.
“Crypto is going to become more prevalent as an element in many different crime types,” she told DL News in an interview.
And while she acknowledges progress is being made in educating law enforcement officials about crypto, there’s still work to do.
“As crypto becomes more and more common in different types of crime, you’re going to need mainstreaming of crypto knowledge and crypto training across the entire law enforcement base,” she said.
Hell money
The Hong Kong counterfeiting episode is reminiscent of another case in May when police arrested three cryptocurrency exchange staff in the same area for allegedly swindling a customer out of $128,000 in a USDT to Hong Kong dollar transaction, also in Mong Kok.
The scammers lured the victim by showing a stack of “hell money” — fake cash printed on joss paper used in traditional rituals.
In neither case was it revealed exactly why the victims were changing such large sums of money in dodgy Mong Kok offices.
These sorts of exchanges are popular with mainland Chinese wishing to spirit money out of China, which imposes strict limits on how much can be transferred abroad.
Either way, these incidents highlight the increasing convergence of crypto and real-world crime in Hong Kong. While hacks, scams and fraud continue to proliferate, the physical dimension of crypto crime is becoming more pronounced.
Two weeks ago, two women were arrested for kidnapping a toddler and demanding a US$660,000 ransom in USDT.
In another case, a 55-year-old investor was abducted in Sheung Shui after her attackers used a stun gun on her husband.
Brutal incident
A particularly brutal incident occurred in March when a 19-year-old crypto trader was lured to a hotel in Hung Hom and beaten with baseball bats for his US$23,000 in crypto earnings.
Similar incidents have been reported elsewhere.
In the Philippines, two Chinese businessmen were kidnapped last month, with their captors demanding US$2 million in USDT. Tragically, both victims were found dead near Manila.
These violent crimes contrast with the more typical online scams, emphasising the urgent need for law enforcement to adapt.
‘The investment really has to be on two fronts, both lifting the baseline and building deep capabilities.’
Chengyi Ong, Chainalysis
Law enforcement officials in APAC themselves seem to agree. Chainalysis recently surveyed law enforcement officials, revealing significant gaps remain in crypto knowledge.
A total of 42% admitted to a low level of understanding of the asset class. Two-thirds believe that cryptocurrency is primarily used by criminals.
Globally, more than 90% of law enforcement agree that more resources should be devoted to investigating crypto-related cases.
Capabilities must keep pace through concerted and well-directed investment, said Ong.
She advocates a dual approach.
“The investment really has to be on two fronts, both lifting the baseline and building deep capabilities,” Ong said.
Callan Quinn, DL News’ Hong Kong correspondent, covers the crypto industry in Asia. Have a tip? Contact the author at [email protected].
