Crypto Scams

In recent years, the rapid growth of the cryptocurrency market has also witnessed a surge in crypto-related scams all over the world.

These scams encompass a wide range of fraudulent activities, including fake initial coin offerings (ICOs), Ponzi schemes, and phishing attacks.

The lack of regulatory oversight and the anonymous nature of many cryptocurrencies might have created an environment conducive to fraudulent practices, leading to financial losses for individuals and organisations alike.

Recent Crypto Scam in Hong Kong

The recent targeting of Binance users in Hong Kong by fraudsters has prompted the local police to issue a warning.

At least 11 Binance customers in Hong Kong fell victim to phishing scams via text messages, resulting in losses exceeding $446,000 (equivalent to HKD 3.5 million) in two weeks.

Hong Kong Police warned the public:

"Recently, fraudsters posing as Binance sent text messages claiming that users must click the link in the message to verify their identity details before a deadline, otherwise their account would be deactivated. When the victims click the phishing link and enter the credentials to ‘verify’ their accounts, the fraudsters gain full access to their Binance account and drain the funds."

Recent Crypto Scam in South Korea

South Korean police have taken action against a company allegedly involved in a crypto scam that reportedly defrauded approximately 4,000 individuals, resulting in the arrest of 25 people.

The firm is suspected of accumulating nearly $14 million in fiat and cryptocurrency from its customers.

Authorities have revealed that the group included a cryptocurrency developer and the head of a multi-level sales company, who promoted their coin in public KakaoTalk chat rooms frequented by crypto enthusiasts.

According to police reports, the group enticed victims by promising significant profits through investments in the unnamed coin before its listing on a domestic crypto exchange.

While the token itself appears to have been legitimate, the claims made about it were deemed deceptive.

The investigation was initiated after the coin was swiftly delisted following its initial listing.

It was discovered that the firm had leveraged partnerships with large corporations to lure unsuspecting investors into their scheme.

The group allegedly engaged in market manipulation tactics to boost their own profits while causing substantial financial harm to investors across the country.

Untangle the Causes of Rising Crypto Scam

Based on the recent crypto scams in Hong Kong and South Korea, the common tactic employed by most crypto scammers involves enticing potential victims with promises of lucrative returns.

To discern some underlying causes contributing to the surge in crypto scams over the years:

There are three primary factors that make cryptocurrency particularly appealing to scammers.

"Absence of a centralised authority, irreversible transactions, and the potential for near-anonymity."

Firstly, the absence of a centralised authority within the cryptocurrency system creates a conducive environment for fraudulent activities to thrive, as there is no overarching regulatory body to oversee transactions.

Secondly, the irreversible nature of crypto transactions poses a challenge for victims of scams, as the lack of a mechanism for reversing transactions can lead to substantial financial losses.

Lastly, the potential for near-anonymity within the crypto space allows scammers to operate with a degree of anonymity, making it difficult for law enforcement agencies to track and hold them accountable for their illicit activities.