Three individuals have been arrested by the Hong Kong police suspected of defrauding a businessman out of HK$3.11 million, worth around $399,000, in crypto assets by offering him three bundles of counterfeit HK$1,000 banknotes.
The officers reportedly confiscated 10,978 fake HK$1,000 banknotes during a raid on the Mong Kok office, where the fraudulent transaction took place last week.
Cryptocurrency Fraud Bust
A source told the South China Morning Post that the 44-year-old businessman was shown three bundles of what appeared to be HK$1,000 banknotes at the Nathan Road location before being instructed to transfer HK$3.11 million in Tether’s USDT stablecoin to a specified digital wallet.
An insider was quoted saying,
“Except for two genuine banknotes placed on the top and bottom of each bundle, the others were bogus bills, known as training notes.”
The source also mentioned that the businessman requested to inspect the banknotes. However, the two accused, who appeared to be office employees, refused, stating they had not received instructions from the store manager via phone. After finding the behavior suspicious, the victim alerted the police.
The accused in question are a 24-year-old man and a 42-year-old woman. In addition to these two individuals, the Hong Kong police subsequently arrested another man upon discovering the counterfeit notes in the office. The trio were detained on suspicion of obtaining property by deception and possession of counterfeit banknotes.
Cases of deception involving crypto transactions have spiked in Hong Kong. In fact, police officers seized 1,693 “training notes” in three other cases of deception involving crypto transactions.
Increased Crypto Fraud Forces Hong Kong to Enhance Skills
Hong Kong has established itself as a major crypto hub in Asia. However, along with attracting capital, the city-state has also experienced an increase in fraudulent activities which has forced authorities to ramp up their skills. Experts note that Hong Kong has built significant law enforcement experience in dealing with crypto, enabling authorities to effectively trace money-laundering activities involving digital assets.
At the same time, the Securities and Futures Commission of Hong Kong (SFC) has intensified its oversight of suspicious crypto entities. Earlier this month, the securities watchdog issued warnings against seven crypto trading platforms operating illegally in the region without proper licenses.
Since January 2020, the Hong Kong SFC has maintained an alert list, which currently includes 39 entries. In 2024 alone, 28 cryptocurrency exchanges were flagged. The latest additions to the list are Taurusemex, Yomaex, Bitones.org, BTEPRO, CEG, XTCQT, and Bstorest.