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Losses To Crypto Scams In Hong Kong Increased To $217 Million In 2022: Report

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Cryptocurrency scams have become a plague ravaging crypto ecosystems across the globe.

Some countries recorded a massive financial loss to these scams amid the severe crypto winter in 2022.

Some scammers took advantage of vulnerable users who needed options to recover from losses in the bear market.

cryptocurrency, gold bar, concept

The latest report by South China Morning Post (SCMP) revealed that crypto scams accounted for over 50% of $407 million lost to tech crimes by Hong Kong residents in 2022.

According to the report, losses from crypto scams in the city amounted to 1.7 billion Hong Kong dollars ($216.6 million) last year.

Crypto-related Scams Accounts For 60% of Money Stolen Via Tech Crimes

In detail, Hong Kong residents lost massively to tech scams in 2022, with cryptocurrency scams amounting to 50% of the overall funds lost.

According to the local police, losses to crypto scams increased by 106% from the previous year to ~217 million in 2022.

According to SCMP, crypto scams reported in the Special Administrative Region in 2022 reached 2,336 cases, a 67% increase from the 1,397 cases recorded in 2021.

The report noted that funds stolen through tech crimes from Hong Kong residents in 2022 amounted to 3.2 billion Hong Kong dollars (HK$), about $407 million.

Out of $407 million stolen, crypto-related crimes accounted for 50%, according to data from the Hong Kong Police CyberDefender website.

According to data, online scammers looted about 3 billion HK$ annually over the previous four years. The report also noted that 2022 saw almost 23,000 reported cases of tech-related crimes.

According to SCMP’s intel, the Hong Kong Police recorded increased crypto scams because cryptocurrencies allow fraudsters to hide their identities, transaction flow, and funds destination.

Insider reports revealed that tracking criminal funds has become more complicated for enforcement agencies due to crypto usage for online crimes.

The Hong Kong Police Force’s cybersecurity and technology crime bureau shared its observations on a typical crypto scammer.

The agency described the attributes of crypto scammers, noting that the perpetrators pose as highly experienced crypto assets, gold, or foreign exchange investment specialists.

According to the police department, scammers deceive unsuspecting victims into downloading fake investment apps showing fake transactions and returns.

Hong Kong Proposes New Crypto Licensing Regime

The above report comes as the Hong Kong government increases its focus on its plans to become Asia’s crypto hub.

The government has been developing infrastructure and reforming its cryptocurrency regulations to suit its vision in contrast with China’s crypto ban in 2021.

In February, Hong Kong’s Securities and Futures Commission (SFC) asked for public feedback regarding its plans to initiate a licensing regime for cryptocurrency exchanges.

The licensing regime would take effect from June 2023. The SFC announced the public consultation process on February 20, highlighting the new licensing regime, which states that all centralized crypto exchanges in Hong Kong must register with the regulator.

In a statement, Julia Leung, the SFC’s chief, cited the recent FTX collapse-engineered crisis in the crypto space as the primary reason for clear regulatory guidelines for cryptocurrencies.

She noted that regulatory guidelines hold investor protection as a top priority.

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