Crypto Scams Double In Hong Kong, Resulting In $217M Losses Last Year: Report

Hong Kong has seen a significant increase in losses from cryptocurrency scams, according to a report by local police. In 2022, losses from crypto scams in the city totaled 1.7 billion Hong Kong dollars ($216.6 million), a 106% surge from the previous year.

However, the number of crypto-related scams reported in Hong Kong also rose by 67% from 1,397 cases in 2021 to 2,336 cases in 2022, as reported by the South China Morning Post (SCMP).

Crypto scams accounted for over 50% of the 3.2 billion HK$ ($407 million) stolen from city residents in technology crimes. According to official data from the Hong Kong police CyberDefender website.

Moreover, the report shows online scammers stole 3 billion HK$ annually over the past 4 years, similar to previous years. Additionally, there were almost 23,000 reported cases of technology-related crimes in 2022.

Cryptocurrency Makes Tracking Criminal Funds Complicated

According to SCMP sources, the use of cryptocurrency as a medium for online scams has increased. Fraudsters are taking advantage of its anonymity to hide their identities, transaction flow, and final destination.

Therefore, this has made tracking criminal funds more complicated for law enforcement, with one insider describing the use of digital assets in online crimes as a significant challenge. The Hong Kong police force’s cybersecurity and technology crime bureau also shared observations about the typical crypto-related scammer.

Perpetrators are described as pretending to be highly experienced in investing in digital assets, precious metals, or foreign exchange products. They often lure victims into installing fraudulent investment applications, which show fake transactions and returns.

Hong Kong’s crypto regulation approach

The report comes at a time when the Hong Kong government is increasingly engaged in the development of cryptocurrency infrastructure. Hong Kong distinguishes its crypto regulation approach from China’s blanket crypto ban enforced in 2021.

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In February, Hong Kong’s Securities and Futures Commission called for public feedback on the newly proposed licensing regime for crypto exchanges. The regime is set to take effect from June 2023.

Furthermore, the rise of crypto scams highlights the need for proper regulations and cybersecurity measures in the crypto industry. As more people invest in digital assets, they must be aware of the risks associated with crypto-related scams and take necessary precautions to protect themselves from falling victim to fraudulent activities.