Hong Kong police have solved a major stablecoin-related fraud case that involved safe deposit boxes and virtual currency trading.
According to Hong Kong Wen Wei Po, a 77-year-old woman walked into a cryptocurrency exchange shop on Kui Bailey Street in Sheung Wan with HK$3 million (around US$384,000) in cash to buy stablecoins.
The clerks in the shop tricked her into making a deposit into a “fake safe” that seemed to have a hidden compartment.
While they appeared to process the transaction, the fraudsters transferred around HK$78,000 stablecoin value to her wallet to buy time, before stealing HK$2.92 million cash and running away.
Police Use CCTV and “Sharp Eye Project” to Track Down Suspects
When she realized she had been scammed, she called the police, and following an immediate investigation into the incident by the Technology and Wealth Crime Unit of the Central Police District, police officers were able to identify and arrest three suspects just three days after the incident.
Using footage from the city-wide camera network named the “Sharp Eye Project,” and an extensive analysis of intelligence information, police officers identified and arrested the three suspects.
The suspects included two local men, aged 33 and 58, and a 24-year-old female.
Police have established that some of the suspects arrested have links to organized crime groups and expressed concern that organized crime groups may be joining Hong Kong’s expanding virtual asset sector.
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Suspects Face Charges as Police Pursue More Arrests
Inspector Tsang Kin-wah stated that the suspects were charged with “obtaining property by deception” and “handling stolen goods.”
The 33-year-old man and 24-year-old woman, who are reportedly a couple, are believed to have taken a leading role in running the scam. The man is due in the Eastern Magistrates’ Courts on August 30.
Investigations found that the men had rented the shop for more than a year and made renovations a couple of months ago, but the store was unlicensed to act as a money-changing or crypto exchange service.
More importantly, authorities are now also working to locate the remaining stolen funds and do not rule out further arrests, as accomplices may still be at large.
Scammers Exploited Fake Crypto Exchange to Target Victims
Initial reports indicate that the scam shop was established to steal customers’ cash by pretending to sell cryptocurrency at advantageous exchange rates.
Victims, often referred from various social networking platforms, were instructed to bring significant amounts of cash in and were somehow duped into giving the cash away via a contrived transaction.
At this time, there are no other victims identified in this case, but police are cautioning that there are other fraudulent activities likely to exist in Hong Kong.
This case exemplifies the heightened risks for retail investors who are dealing with unlicensed shops in dealing with cryptocurrency as part of the increased uptake of digital assets in the jurisdiction.
Wider Crackdown on Crypto-Related Crimes in Hong Kong
This incident adds to a long list of cryptocurrency-related frauds now being investigated in Hong Kong this year.
On April 23, the police arrested over 500 persons related to HK$1.56 billion (US$199 million) worth of crimes from online romance scams to money laundering, which became one of the city’s biggest operations to deal with crypto-frauds, UnoCrypto reported.
Only weeks later, on June 4th, we reported that the authorities eliminated a US$15 million cross-border criminal financing network laundering cash through 580 bank accounts and crypto channels.
In the “Night Suppression” operation, the perpetrators employed a combination of technology and psychological pressures in their crimes.
As scams increasingly use technology and apply psychological pressures, the authorities in Hong Kong have ramped up their monitoring and also improved regional cooperation.
Also Read: Hong Kong Law Enforcement Bust $46M Crypto Fraud Ring