Police in Hong Kong have reportedly broken up a crypto scam that used face-swapping technology to persuade lonely men to part with HK$360 million (US$46 million) via a fake investment platform.

According to a statement issued on Monday, police arrested 21 men and six women for their part in the plot that saw them swap their faces with those of beautiful women during video calls to persuade victims to hand over money.

Victims included men from Taiwan, China, Singapore, and India.

“The syndicate’s operation began with online romance,” said Senior Superintendent Fang Chi-kin, head of the New Territories South regional crime unit.

“Following initial contact with victims on social media platforms, they first sent artificially generated photos using AI technology to create attractive individuals in terms of appearance, personality, occupation, education, and other aspects,” he added.

“Despite engaging in video calls, the victims continued to believe they were building a romantic relationship with supposedly superior women.”

Fraudsters sent victims fabricated proof of profits but it became clear that they had been conned when they were unable to withdraw any funds.

Read more: Hundreds freed from ‘pig-butchering’ compound after victim escapes

According to police, recruits to the Hong Kong crypto scam were fully trained and even received a manual detailing how to approach victims and create personas.

“These criminals view innocent citizens as exploitable targets, using every word to gain their trust, ultimately aiming to take their money,” said Superintendent Iu Wing-kan.

Authorities said the operation represented the first time they had cracked down on a Hong Kong-based fraud syndicate that employed deepfake tech to cheat people.

As a result of the raids on the gang’s 4,000 sq ft warehouse base, police also seized computers, more than 100 mobile phones, HK$200,000 ($26,000) in suspected proceeds, and a number of luxury watches.

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Police in Hong Kong have arrested three individuals accused of stealing HK$3.11 million (~$400,000) worth of Tether (USDT) and seized almost 11,000 fake banknotes from their office. 

The three suspects allegedly convinced a 44-year-old businessman to convert the USDT. They reportedly showed him bundles of cash he would receive in return before instructing him to transfer his USDT into the scammers’ crypto wallet.

However, according to an insider source who spoke to the South China Morning Post, “Except for two genuine banknotes placed on the top and bottom of each bundle, the others were bogus bills, known as training notes.” 

The source said that after the transfer, “The merchant asked to inspect the banknotes, but the employees refused to allow him to check them, claiming that they had not received instructions from the store manager via phone.”

Read more: Hong Kong crypto crime triples, police handling 170% more cases

The man reported the incident to the police last Friday. On Monday, police announced they had raided the offices and seized 10,978 forged HK$1,000 banknotes.

The notes look real despite having Chinese text printed on them that says ‘practice coupon’ and they lack watermarks.

Police arrested and accused a 42-year-old woman, a 24-year-old man, and a 40-year-old man of obtaining property by deception and possession of counterfeit banknotes. The three are also being questioned about similar instances of crypto conversion scams. 

If found guilty, they could receive a maximum of 10 years in jail for obtaining property by deception and 14 years for the illicit use of fake banknotes.

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Sam Altman’s WorldCoin and its controversial iris-scanning orbs are reportedly set to be kicked out of Hong Kong after being found to violate the city’s privacy laws by a data watchdog. But is the impending regulatory action as bad as it seems?

While the ban from Hong Kong is being celebrated by privacy advocates and Sam Altman distrusters, it may not be a permanent problem for WorldCoin. The reasons for being booted from Hong Kong by the Privacy Commissioner for Personal Data (PCPD) include:

• Relevant privacy notice and biometric data consent forms not being available in Chinese
• Insufficient transparency of the personal data policy and practices
• The fact that before the collection of personal data, participants weren’t clearly informed of how the data would be used

These issues all seem like they can be solved relatively simply: By translating instructions and terms of service forms into Mandarin and Cantonese, making policy practices more transparent, and informing any participants exactly how their data will be used.

However, the fact that these solutions are so obvious may point to the real problem for WorldCoin.

Read more: Worldcoin fails to shift ban from Spanish court

Never fixed

The fact that WorldCoin wasn’t already providing terms of service and instructions in Mandarin or Cantonese at its locations in Hong Kong suggests a more sinister reason for getting kicked out of Hong Kong, namely that WorldCoin has — possibly — been purposely providing the least amount of information to users and regulators as possible to take advantage of the biometric data that the public is unaware of.

There are plenty of ways that WorldCoin could work with the Hong Kong PCPD to mitigate risks and provide more transparency so it could offer their iris scanning orbs in Hong Kong again, but will it? It remains to be seen.

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A father-son duo handed themselves over to Hong Kong police on Wednesday after their family car was linked to the kidnapping of a crypto investor.  

According to the South China Morning Post, the 55-year-old crypto investor was reportedly taken from her car by four captors and bundled into the back of the car on Tuesday. She was with her husband at the time, but he was reportedly attacked with a stun gun when he tried to intervene. 

A source familiar with the case told the SCMP on Thursday that a 70-year-old businessman and his 30-year-old son were arrested at Tai Po Police Station the next day. They told SCMP that the businessman invested HK$15 million ($1.9 million) in crypto 18 months ago through the kidnapped woman. 

Read more: Bitcoin podcaster secretly records Coinbase scammer’s confession

According to the source, after investing, the businessman was apparently unable to retrieve his money or contact the woman.

The source stressed that the arrested father-son duo were not the captors involved with the kidnapping. Police say they are still searching for more suspects.  

The father-son duo were reportedly arrested on suspicion of false imprisonment and assault and were still being questioned on Thursday morning. 

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Dubai-based derivatives exchange Bybit and 11 of its products have been listed as ‘suspicious’ by Hong Kong’s market regulator.

The country’s Securities and Futures Commission (SFC) added Bybit to its ‘Suspicious Virtual Asset Trading Platforms Alert List’ on Thursday.

At the same time, it added a number of the company’s products, including ‘Futures Contracts and Inverse Futures Contracts,’ ‘Bybit Leveraged Tokens,’ and ‘Bybit Wealth Management’ to its ‘Suspicious Investment Products Alert List.’

In a statement, the SFC said, “The SFC is concerned that these products have also been offered to Hong Kong investors and wishes to make it clear that no entity in the Bybit group is licensed by or registered with the SFC to conduct any ‘regulated activity’ in Hong Kong.”

It added that it “will not hesitate to take enforcement action against unlicensed activities where appropriate.”

This month, the SFC also issued warnings about Hong Kong-headquartered exchange BitForex after it shut down withdrawals and saw outflows of nearly $60 million.

Read more: Crypto exchange BitForex shuts down withdrawals and disappears

Coinbase received subpoena possibly linked to Bybit

Late last year, Coinbase reportedly contacted users, informing them of a subpoena it received from the Commodity Futures Trading Commission (CFTC) demanding user account information and transaction history.

The email sparked speculation that the CFTC is targeting Coinbase users who interacted with Bybit — suggesting the commission may be preparing for legal action against the exchange.

“We write to inform you that Coinbase has been served with a subpoena,” the email to select users read, “seeking information related to your account and account transaction activity.”

However, the email stated that Coinbase may decide to counter the CFTC subpoena — and therefore user information will not yet be handed over.

“No action is required from you,” the email continued, “but Coinbase may respond to the Subpoena unless served before November 30, 2023 with a motion to quash or other objection to the subpoena that has been filed with the Court — including by sending information concerning your Coinbase account to the [CFTC].”

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The rate of crypto crime in Hong Kong has reportedly tripled over the past three years, with documented crypto cases in 2023 involving almost 4.4 billion yuan (roughly $611 million), local outlets report. 

Hong Kong’s Financial Services and Treasury Minister Hui Ching-yu reportedly revealed that the city’s Securities and Futures Commission (SFC) recorded 1,397 and 2,336 cases of crypto crime in 2021 and 2022 respectively. This figure rose to 3,415 in 2023.

According to Hui, the SFC reportedly listed 14 crypto exchanges on its ‘List of Suspected Virtual Asset Trading Platforms’ as of February 14. 

The South China Morning Post (SCMP) also reported that 5,105 cases of online investment fraud were handled by the police last year, a 170% jump in cases from the previous year. 

Read more: Police probe HK crypto exchange after users lose $15M to scams

The same outlet has also reported that a financial manager in Hong Kong lost HK$17.8 million (US$2,173,500) through investing in bogus crypto and gold on a scam trading site. 

The 57-year-old woman was baited with false profits to make further trades that she would ultimately never be able to withdraw. She was coaxed into sending money to various crypto wallets owned by the scammer under the guise that she was helping finance a legal case. 

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A Hong Kong crypto exchange is being probed by police after users accused the platform of losing around HK$120 million ($15 million) in a series of crypto scams.

According to the South China Morning Post, police began probing the Hounax exchange on Saturday and claimed arrests were coming. The Securities and Futures Commission (SFC) already listed the exchange as suspicious this month after it faked ties between a venture capital firm and a financial institution.

So far, 88 reports have been made from 131 alleged victims. 

According to the superintendent of Hong Kong’s Commercial Crime Bureau (CCB), “The scammer impersonated investment experts and lured people to invest in virtual currencies through a virtual asset trading platform with promises of high returns.”

Read more: Do Kwon granted extradition, but to US or South Korea?

They invited victims to social media group chats dedicated to sharing “hot tips.” Here, victims were encouraged to deposit funds into a third-party investment app. However, police described the app’s investment figures as “meaningless numbers made up by the scammers to gain their trust.”

“In fact, the moment they transferred the funds to the third-party account, the money was transferred away,” the chief inspector of the CCB said. Some victims were forced to pay a “verification” fee that was as high as 80% of their original deposit if they wanted to withdraw, which of course they never could. 

Police said there has been a 105% increase in reported investment scams in the first nine months of this year when compared to last year, with over 4,300 reported scams and HK$2.8 billion ($360 million) in lost funds.

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A Hong Kong man accused of playing a role in the unfolding JPEX crypto scandal has apparently been caught destroying potential evidence using paper shredders and a bathtub full of bleach.

As reported by the South China Morning Post (SCMP), the man, known only as ‘Tang,’ was arrested along with three other suspects who authorities say are “relatively close to the core” of the troubled Dubai-based crypto platform.

The arrests bring the total number of people apprehended in connection with JPEX to 19 with police reportedly still tracking a number of people accused of money laundering and fraud. 

JPEX was accused this month by Hong Kong’s Securities and Futures Commission of having “suspicious features” while also operating without a license. Access to JPEX for residents in Hong Kong was blocked last week and more than 2,400 complaints have been made to the police regarding the company.

Alongside the arrests, police also seized cash and valuables worth HK$6.5 million ($830,000). An additional HK$8.2 million ($1.05 million) of funds held in a casino have also been frozen. 

Hong Kong assistant police commissioner, Chung Wing-man, said, “We believe our investigation has reached figures that are close to the core, but we still need to find out whether the mastermind is an individual or a group.” 

JPEX USDT outflows

Blockchain analytics firm Bitrace discovered a JPEX-associated wallet containing USDT and various other tokens labeled as “contaminated.” The wallet is reportedly connected to money laundering, gambling, and the black market. Bitrace also noted that 7.21 billion in USDT (worth $7.2 billion) was moved out of JPEX wallets this month.

“The scale of the syndicate is very big, there’s still massive investigation work that needs to be done,” according to the commissioner. Losses from the JPEX scandal are expected to exceed HK$1.5 billion (over $191 million).

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Hong Kong-based crypto platform JPEX has reportedly suspended trading and seen one person connected to it arrested after an investigation determined that it has been operating in the country without a license, reports CoinDesk.

The Hong Kong Securities and Futures Commission (SFC), which carried out the probe, also claimed that it has received numerous complaints about the exchange.

As a result of the investigation and subsequent action, JPEX says it’s delisting all transactions on its Earn Trading interface and ensuring ongoing orders. It also says that it will “gradually adjust the withdrawal fees back to normal levels,” and is even considering restructuring as a Decentralized Autonomous Organization (DAO).

In a blog post published Monday, the exchange said: “Recently, due to the unfair treatment by relevant institutions in Hong Kong towards JPEX, a cryptocurrency trading platform, and a series of negative news, our partnered third-party market makers have maliciously frozen funds. 

“They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties.”

“We must restructure at this stage to redefine our operational direction and jointly formulate future strategies for JPEX,” it added.

“Toward this end, we will publicly collect users’ suggestions, discuss proposals with the dedicated team, and select reasonable plans for a user referendum. The specific implementation of the referendum will be announced the following day. We look forward to users’ participation and moving forward together.”

Read more: Just two exchanges registered in Hong Kong as crypto ban lifts

According to reports in Taiwan, JPEX’s Taipei office is currently empty and authorities have questioned influencers hired by the firm.

Visitors to JPEX’s booth at the recent Token2049 conference in Singapore also reported that the spot was seemingly abandoned by the second day.

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Three men in Hong Kong have allegedly scammed HK$1 million ($128,000) worth of cryptocurrency from a female accountant using a bundle of counterfeit banknotes and a fake “cryptocurrency shop.” 

The 29-year-old victim first saw the supposed cryptocurrency trading outlet advertising lucrative exchange rates on Instagram. She visited the shop last Sunday with the goal of exchanging 128,040 Tether ($128,067) into fiat currency.  

At the shop, an “employee” handed her a bundle of HK$1,000 banknotes and told her to send the crypto to a designated wallet controlled by them. However, she failed to notice that the stack of cash contained just two genuine notes at the top and bottom of the pile while the rest were training aids for banks. 

After transferring the crypto, she was told to wait outside by the “employee” as they supposedly needed the toilet. Instead, the man left her with the counterfeit notes and never returned. Suspecting she’d been scammed out of her crypto, she called the police at 10pm that evening. 

Read more: New York man joins son in jail after alleged crypto fraud plot

According to the South China Morning Post (SCMP), police investigating the Hong Kong crypto scam arrested a 21-year-old student who held the wallet involved and a 46-year-old man who is the registered tenant of the “cryptocurrency shop.”

Both of the men were arrested on Wednesday and accused of obtaining property through deception in the alleged scam. The pair have since been released on bail. 

The third co-conspirator, allegedly behind the fake note bundle, is currently being chased down by authorities in Tsim Sha Tsui. 

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