Beware of cryptocurrency scams

Cryptocurrencies
Bitcoin
Scams
Anti deception
Investment scams
Online scams

Author: Mr Chin23/09/2021

When it comes to cryptocurrencies, the first thing that comes to mind is their high volatility, which is typical of emerging virtual products, as well as crypto-related scams. The Hong Kong Police Force logged 496 crypto-related crime cases during the first half of the year, amounting losses of more than HK$200 million – five times the amount in the same period last year!

Criminals are drawn to cryptocurrencies because of their anonymity. In cryptocurrency trading, the trading parties’ personal information or IP address is not recorded in the blockchain, making cryptocurrencies highly anonymous and difficult in tracing the holdings. In ransoms, extortions, online romance or investment scams, criminals now ask for money in cryptocurrency rather than legal tender, as the former allows them to conceal their identities and conduct money laundering activities.

Besides, as cryptocurrencies are emerging products, some people may become overly optimistic without fully understanding their nature, risks, operations and trading methods. Scammers are quick to take advantage of this misconception in fabricating their investment swindles, which often claim to offer high yields with low risks.

Below are some commonly seen crypto-related crimes:

  • Online romance scams: After gaining the trust of victims, scammers will then use different excuses, such as investments, gifts or urgent need of cashflow, etc., to ask for money in cryptocurrencies instead of cash to conceal their identities.
  • Investment platforms: Scammers set up fake websites that point victims to download a mobile app of a crypto-investment platform through unofficial channels. Cryptocurrencies are then bought through the app, then transferred to designated crypto wallets. From the fake website, the victims may see growth in their deposited money, while in fact their cryptocurrencies are in the hands of the scammers.
  • ICO: Initial coin offering, or ICO for short, refers to the initial offering of new cryptocurrencies to fund investment projects. As investors expect huge profits in the future, they are often enticed to enrol in such ICOs, which valuation is of low transparency. What’s worse is that some so-called ICOs are never issued.
  • Robbery in a face-to-face transaction: After completing a couple of small transactions with cryptocurrency buyers, the criminals claim to have large sums of cryptos on sale. Victims are then lured to bring cash to meet the criminals at a certain location and make the transaction face-to-face. When the victim arrives, he/she are robbed of his/her cash by the criminals who then flee the scene. Some criminals may impersonate as cryptocurrency buyers and lure the victims into closing a deal physically at a location. Once the criminal receives the cryptocurrency, the large sum of cash is handed to the victim, who will then be robbed by the culprit(s) nearby.
  • Ransomware: The outlaws hack into victims’ computer systems or introduce malicious code to their encrypt files and databases. The victims are then forced to pay the ransom in cryptocurrencies.

Scammers have numerous tricks up their sleeves. If you do not want to become the next victim, always stay vigilant – especially when it comes to crypto-related transactions or investments. For enquiries about scams or suspected acts of fraud, call the “Anti-Scam Helpline 18222” of the Anti-Deception Coordination Centre of the Hong Kong Police Force for assistance.

Learn more:
Know about the risks of cryptocurrencies
Are you vulnerable to online scams?
Online scams