Authorities in Hong Kong have flagged a surge in counterfeit banknotes brought into circulation via cryptocurrency scams.

According to a local report, the Hong Kong police seized 3,396 fake notes between January and April 2024. The counterfeits amounted to a total face value of HK.55 million, approximately 6,130. 

Specifically, just three cryptocurrency scams and frauds have been responsible for a big chunk of these fakes in circulation.

One such case saw a fraudster set up a bogus cryptocurrency for a cash counter in Tsim Sha Tsui. An unsuspecting woman fell victim to this scammer when she exchanged HK million in Tether’s USDT stablecoin. The scammer got away with the crypto funds, and the woman was left with fake HK,000 notes.

Another person was robbed of HK million via a similar tactic, with the fraudster getting away with the man’s USDT.

Per the recent report, the Hong Kong police have seized 1,693 “training notes” and 347 low-quality counterfeit bills tied to these scams. Training notes are employed to train bank staff and closely resemble the actual currency.

The police have arrested three individuals in connection with these scams. The funds have been seized.

Earlier this year, the Hong Kong police also apprehended 3,000 hell banknotes, a safe, and a note-counting machine from a cryptocurrency exchange shop in the same Tsim Sha Tsui region. 

Hell banknotes are used in traditional Chinese rituals as offerings to ancestors or deities. These closely resemble real currency.

As of now, the authorities have asked the public to hand over counterfeit notes to the police or risk committing “the offense of passing counterfeit notes.”

Recently, the Hong Kong police have also noticed a significant uptick in cryptocurrency-related crimes. Crimes involving cryptocurrencies have surged from 2,336 cases to 3,415 in a year. 

A whopping 3 million worth of funds have been lost as a result.

The scams primarily consisted of two different tactics. 

In the first scenario, scammers would try and convince victims to transfer funds to their wallets. This is typically seen in the case of pig butchering scams. 

The scammers also reportedly use overseas crypto exchanges, further complicating the tracking process, as reported by the authorities.

The other scenario involved scammers relying on the hype around cryptocurrencies. With cryptocurrencies becoming a hot topic in finance, scammers often leverage the lack of understanding of their victims to defraud them. 
This surge in crypto crimes in the region has spurred increased scrutiny. Hong Kong’s securities regulator has set up a licensing regime for crypto service providers.

On the other hand, Chinese authorities have pledged to work with the United Arab Emirates (UAE) in a bid to combat cyber crimes.