Hong Kong police arrest 4 suspects in crackdown on cryptocurrency fraud syndicate, which conned man out of HK$1.58 million

2022-08-16

Hong Kong police have arrested four people in a crackdown on a fraud syndicate which coaxed a businessman into transferring about HK$1.58 million (US$200,000) in digital money in exchange for two bundles of fake banknotes in a bogus cryptocurrency transaction.

The three men and one woman, picked up in a series of raids at daybreak on Tuesday, included the alleged swindler who met the victim in a Hung Hom office set up by the gang and lured him into transferring 200,000 Tether coins to an e-wallet account last month.

According to the force, the 27-year-old merchant, surnamed Cheong, saw an advertisement on social media about the trade of Tether digital coins on July 1 before setting up a meeting with a “buyer” via WhatsApp.

He was asked to go to the office in Hung Hom Commercial Centre on Ma Tau Wai Road in Hung Hom for the transaction on July 8. The office was rented by the syndicate about a month ago.

“During the meeting with a ‘staff member’ in the office, two bundles of bills wrapped with cling film were placed in front of the victim for the payment of the transaction,” a police source said.

As instructed, the merchant transferred 200,000 Tether coins worth nearly HK$1.58 million to a designated e-wallet account to complete the deal.

After the transfer, the “employee” in his 20s’ claimed he needed to get a cash counting machine and left the scene.

Cheong realised he had been conned when the swindler failed to return and discovered that except for two genuine banknotes on the top of each bundle, the others were bogus bills, known as training notes, with three Chinese characters meaning “practice coupon” printed on them.

The training notes look genuine aside from the three Chinese characters printed on them. They bear no security features such as a watermark and are said to be used by mainland bank staff for training and counting practice.

After gathering intelligence and poring over security camera footage, four teams of officers from the Kowloon City police station raided four locations in Tai Po, Sau Mau Ping and Kowloon City and arrested the four suspects around the same time at 7am on Tuesday.

The alleged ringleader of the syndicate - a 24-year-old man who is also a suspected Sun Yee On triad member – was caught in a Tai Po flat.

As of Tuesday afternoon, the suspects were still being detained on suspicion of conspiring to defraud – an offence punishable by up to 14 years in jail.

Senior Inspector Tang Chun-wing of Kowloon City district crime squad said more arrests could be made as the investigation was ongoing.

Given a recent string of crypto­currency scams, he appealed to the public to stay alert while meeting strangers to conduct transactions and urged cryptocurrency traders to use credible platforms.

In May, a cryptocurrency trader – a 30-year-old woman – was tricked into transferring HK$1.5 million in digital money in a bogus transaction in a Tsim Sha Tsui shop set up by fraudsters.

In the biggest known cryptocurrency scam in Hong Kong so far, a 30-year-old man was conned out of HK$124 million in June last year. He was approached by two men and a woman, all in their 30s, who posed as investment consultants and promised that if he put his money in a cryptocurrency called Filecoin, he would reap huge returns.

The victim handed over the money in two instalments in February and April last year, but he tried to withdraw the amount in June after seeing Filecoin plunge from US$168 to US$73. However, he was unable to contact the consultants and ultimately reported the case to the force.

Source: SCMP