Hong Kong’s Crypto Scam Losses Doubled to $217 Million Last Year: Report

Some countries around the world suffered greater financial losses from cryptocurrency scams despite the massive bear market in 2022.

Losses from crypto fraud in Hong Kong totaled HK$1.7 billion ($216.6 million) last year – a 106% increase from the previous year – according to local police.

The number of crypto-related scams reported in Hong Kong in 2022 amounted to 2,336 cases, a jump of 67% from the 1,397 cases recorded by the police in 2021, South China Morning Post (SCMP) reported.

Fraud in Hong Kong involving cryptocurrency accounted for more than 50% of the HK$3.2 billion ($407 million) stolen from the city’s residents in tech crimes, according to official data from Hong Kong police’s CyberDefender website. Over the previous four years, online fraudsters packed in bags a similar amount of money, or about HK$3 billion a year.

There were almost 23,000 reported cases of technology-related crime in 2022.

Hong Kong tech crime figures. Source: Hong Kong Police CyberDefender website

According to SCMP sources, police have witnessed an increase in the use of cryptocurrency as a vehicle for online fraud, with fraudsters able to hide their identity, transaction flow and final destination. One insider reportedly said that the use of crypto in online crimes has made tracing criminal assets more complicated for law enforcement.

The Hong Kong Police Cyber ​​Security and Technology Crime Bureau also shared some observations about a typical crypto-related scammer, describing such perpetrators as pretending to be very experienced in investing in crypto assets, precious metals or currency products. Such individuals often lure victims into installing fraudulent investment apps showing fake transactions and returns, police said.

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The report comes against the backdrop of the Govt Hong Kong is getting more involved with the development of cryptocurrency infrastructure, distinguishing its approach to crypto regulation from China’s blanket crypto ban imposed in 2021. In February, the Hong Kong Securities and Futures Commission called for public feedback on the newly proposed licensing regime for crypto exchanges due to enter into force from June 2023.