Hong Kong has experienced an increase in crypto scams as it redoubles efforts to become a global digital asset hub. Over the past 10 months alone, police received 1,503 online investment scam complaints related to cryptocurrency investments; 69% were related to this asset class according to public broadcaster RTHK’s report published Tuesday.
As police noted, victims of cryptocurrency scams often lose hundreds of thousands of dollars in one transaction due to fraudulent promises and limited understanding of cryptocurrency, among other reasons. Scammers take advantage of people’s desire for quick money-making opportunities by promising investors they can buy and sell cryptocurrencies with minimal commission costs quickly for large returns – although these promises rarely materialize.
Scammers use various tactics to defraud victims. Sometimes this means luring them into depositing funds with an impostor exchange, only for them to then lose their bitcoins or tokens through romance scams; often using social media or dating websites as bait, con artists build relationships with victims before asking for bank account information – another common tactic used by cybercriminals to take millions from victims.
Online scams cost Hong Kong residents an estimated HK$3.2 billion in financial losses during 2022, an increase of 41% from 2017. Police received 22,797 reports of technology crimes during that year alone – many involving cryptocurrency scams.
Some scams are perpetrated by professional criminal organizations that utilize social media platforms to recruit victims, according to police. Bogus investments are the most frequent victim, such as when a 63-year-old lost the inheritance he received from his late father after falling victim to an online investor posing as a woman cryptocurrency expert who convinced him into investing on an untrustworthy platform.
Hong Kong Police recently advised residents of Hong Kong to exercise extreme caution when dealing with cryptocurrency and non-fungible tokens (NFTs). Residents should not trust anyone offering assistance when investing, such as an exchange licensed by Securities and Futures Commission (SFC), while also researching risks involved with investing.
Doreen Kong Yuk-foon strongly condemned the Securities and Futures Commission (SFC) for passively permitting unlicensed crypto exchanges to operate, noting that developed economies should not permit large-scale scams like Hounax’s operation without licensing from November 1. SFC didn’t publicly flag it until then allowing scammers time to loot millions from it while waiting to report suspicious activities against it.
Since Hounax and other suspicious platforms sprung into question, the SFC has increased its investigations. Unfortunately, however, it remains uncertain as to how long the government can withstand large-scale fraudsters. As such, it lowered minimum capital requirements for crypto exchanges while creating regulations to govern how licensed ones should operate; but investors say this action alone won’t suffice – many want more from SFC before investing again in crypto projects.