In a recent shocking revelation in Hong Kong’s crypto landscape, a scam involving “hell banknotes” has resulted in the apprehension of three individuals from a crypto exchange shop in Tsim Sha Tsui. This disconcerting incident has brought to light the misuse of digital currencies in fraudulent activities, prompting concerns in the crypto community.

The deceitful scheme came to light when a 35-year-old individual reported to the Hong Kong Police Force (HKPF) that he had been unable to receive legitimate currency after attempting to convert his cryptocurrency at the aforementioned shop. Instead, he was presented with what appeared to be stacks of real cash, which in reality turned out to be ‘hell banknotes’—paper money designed for use as offerings to the deceased, devoid of any legal tender value. Following this revelation, swift police action was taken, leading to the apprehension of the three men, aged between 31 and 34, linked to the fraudulent operation.

As part of the investigation, law enforcement seized 3,000 of these deceptive banknotes, a safe, and a note-counting machine, underscoring the calculated nature of the scam. The perpetrators had coerced the victim to transfer his USDT into their wallet, only to subsequently furnish him with valueless paper and abscond from the scene.

Notably, those involved in this fraudulent act could face severe legal repercussions, with Hong Kong’s laws prescribing penalties of up to 14 years in prison for fraud and up to 10 years for acquiring property by deception.

To combat such deceitful activities, the HKPF has released an advisory, recommending the use of only licensed and authorized cryptocurrency exchanges. Moreover, it emphasizes the need for scrutinizing banknotes and exercising vigilance regarding the authenticity of currency received during transactions.

This scam forms part of a broader pattern of crypto-related fraudulent activities in the region. Recently, Hong Kong customs officials apprehended three individuals in connection with a significant money-laundering operation valued at HK$1.8 billion ($228 million), facilitated through a crypto platform and bank accounts associated with shell companies.

Commander Florence Yeung Yee-tak of the Financial Investigation Division of the Customs Department highlighted the challenges in investigating these crimes, citing the inherent “anonymity” of cryptocurrencies and the absence of “jurisdictional boundaries.” She underscored the department’s reliance on intelligence, capital flow analysis, and comprehensive financial investigations to combat illegal activities associated with cryptocurrencies.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.