20th November 2022 – (Hong Kong) Many dubious websites operate on a membership system and only accept payments in cryptocurrencies such as Bitcoin (BTC), Dogecoin (DOGE), Litecoin (LTC), and Monero (XMR). In fact, due to the anonymous nature of cryptocurrency transactions, in recent years it has become an emerging tool for criminals to launder money and commit crimes. According to police figures, from January to July this year, there were 1,254 cryptocurrency-related crimes, with a loss of about HK$800 million, in the same period last year, there were 703 cases, with a loss of HK$312 million, an increase of 78% and 1.56 times year-on-year respectively.
Criminals mainly focus on the anonymous nature of quasi-cryptocurrencies, which make them difficult to trace. Cryptocurrency is cross-regional, the personal data or IP addresses of both parties to the transaction will not be recorded in the blockchain, and it is not supervised by the central banks of various countries. The nature of crimes normally involved extortion, online romance, false investment and other fraud cases.
Using cryptocurrency instead of legal currency is convenient for hiding identity and avoiding surveillance. It is also easy to be used for drug trading, arms and money laundering, which makes law enforcement agencies face challenges in investigation, evidence collection, law enforcement and judicial authority.
In recent years, criminal cases involving cryptocurrencies have occurred from time to time in Hong Kong. For example, a 54-year-old female insurance agent fell into an online romance scam in 2019. She was defrauded of a total of HK$4.2 million by a “boyfriend” who claimed to be an overseas Chinese engineer in the past three years. The “boyfriend” used different excuses to ask her for money each time, and received the money in cryptocurrency to hide his identity.