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Hong Kong’s losses to crypto scams doubled to $217M last year: Report

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Some countries worldwide suffered bigger financial losses to cryptocurrency scams despite a massive bear market in 2022.

Losses from crypto scams in Hong Kong amounted to 1.7 billion Hong Kong dollars ($216.6 million) last year — surging 106% from a year before — according to local police.

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

Hong Kong scams involving crypto accounted for more than 50% of the 3.2 billion HK$ ($407 million) stolen from city residents in technology crimes, according to the official data from the Hong Kong police CyberDefender website. In the previous four years, online scammers bagged a similar amount of money or about 3 billion HK$ annually.

The were almost 23,000 reported cases of technology-related crimes in 2022.

Technology crime figures in Hong Kong. Source: Hong Kong police CyberDefender website

According to SCMP sources, police witnessed an increase in the use of cryptocurrency as a medium for online scams, with fraudsters being able to hide their identities, transaction flow and final destination. One insider reportedly said that crypto use in online crimes has made tracking criminal funds more complicated for enforcement.

The Hong Kong police force’s cybersecurity and technology crime bureau also shared some observations about a typical crypto-related scammer, describing such perpetrators as pretending to be highly experienced in investing in crypto assets, precious metals or foreign exchange products. Such persons often lure victims into installing fraudulent investment applications showing fake transactions and returns, police stated.

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The report comes amid the government of Hong Kong becoming increasingly engaged with the development of cryptocurrency infrastructure, distinguishing its crypto regulation approach from China’s blanket crypto ban enforced in 2021. In February, Hong Kong’s Securities and Futures Commission called for public feedback on the newly proposed licensing regime for crypto exchanges set to take effect from June 2023.