Hong Kong Student Arrested For Masterminding $10M Crypto Scam

Key Points:

• Hong Kong police arrest six in cross-border syndicate that laundered over HK$100 million with cryptocurrency.
• Syndicate used e-wallet accounts to trade digital coins and set up bank accounts in mainland China to collect crime proceeds.
• Suspects detained for suspicion of conspiracy to launder crime proceeds and defraud.

Hong Kong police recently arrested six people, including a postsecondary student, suspected of participating in a cross-border syndicate that laundered over HK$100 million (US$12.7 million) in illegal funds using cryptocurrency.

The student was believed to have helped the group launder illegal funds by using e-wallet accounts to trade digital coins, concealing the origins and flow of the crime proceeds. The digital coins were ultimately transferred to e-wallet accounts overseas to evade detection. The syndicate set up bank accounts in mainland China to collect crime proceeds generated through various scams.

Members then used debit cards to launder illegal funds by purchasing valuables such as gold ornaments and watches in Hong Kong, which were later resold. The group bought digital coins as an extra layer of transactions to conceal the flow of illegal funds. The Hong Kong police began investigating the syndicate in late April after receiving intelligence and cooperated with their mainland Chinese counterparts.

The six suspects, aged 22 to 36, were arrested in a series of raids across the city on Thursday. They included the alleged ringleader, two core members, and an employee at a watch shop. The student was one of the two alleged core members, while the other two were accused of helping the syndicate use bank cards to make purchases in the city. The group was detained on suspicion of conspiracy to launder crime proceeds and defraud.

Officers seized more than HK$1 million in cash and valuables such as watches and gold ornaments, along with debit cards, during the operation. The suspects were still in police custody as of Friday afternoon, and the investigation was ongoing. Senior Inspector Chu Ming-man of the Hong Kong Island anti-triad squad urged young people to be extra vigilant when taking on summer jobs and reminded merchants to verify the authenticity of buyers’ identities and bank cards.

In Hong Kong, money laundering is punishable by up to 14 years in jail and a HK$5 million fine. Officers from the financial intelligence and investigation bureau also arrested 18 residents on Thursday in a separate operation in a crackdown on a criminal syndicate that laundered more than HK$46 million in illegal funds through over 110 bank accounts.

The illegal funds were generated from 54 cases of deception that occurred since December, including telephone deception, internet love scams, online investment fraud, and email swindles. The suspects, consisting of 11 men and seven women aged 23 to 61, were still being held for questioning as of Friday afternoon.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.