A large increase in the number of financial losses brought on by bitcoin scams has been seen in Hong Kong in the year 2022. According to reports from the local police, victims of cryptocurrency scams lost a total of HK$1.7 billion in 2018, marking a 106% increase from the previous year. In addition, the number of incidents of fraud using cryptocurrencies increased by 67 percent from 2021, reaching 2,336 cases. According to the Hong Kong police CyberDefender website, these scams were responsible for more than half of the HK$3.2 billion that was taken from citizens of the city as a result of technological crimes.
The growing usage of cryptocurrencies has made it increasingly difficult for authorities to trace the origin of monies obtained via illegal activity. Fraudsters are able to conceal their names, transactions, and ultimate destination thanks to the anonymity given by cryptographic currency transactions. Because of this, following the money trail left by criminals has become increasingly difficult for law enforcement.
The Cybersecurity and Technology Crime Bureau of the Hong Kong Police Force has provided some insights into the profile of a typical fraudster operating in the cryptocurrency industry. These con artists will claim to have extensive knowledge in the financial markets, particularly when it comes to crypto assets, precious metals, or foreign exchange goods. They often use bait to entice unsuspecting victims into downloading phony investing programs that display fictitious transactions and profits.
In order to differentiate its approach to cryptocurrency regulation from China’s total ban on cryptocurrencies, which will be implemented in 2021, the government of Hong Kong has gotten actively involved in the development of bitcoin infrastructure. The Securities and Futures Commission of Hong Kong issued a request for public comment in February on the updated proposed licensing framework for cryptocurrency exchanges, which is scheduled to go into force beginning in June 2023. Despite this, it is still very important to exercise extreme caution while investing in cryptocurrencies, as con artists continue to develop new methods to abuse the weaknesses of the market.