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In a significant crackdown on financial fraud, Hong Kong police have arrested four individuals, including a 14-year-old, for their involvement in a syndicate using counterfeit banknotes to defraud cryptocurrency owners.&nbsp;
According to local media, the operation <a href="https://www.scmp.com/news/hong-kong/law-and-crime/article/3272192/14-year-old-hongkonger-among-4-arrested-over-use-fake-banknotes-swindle-crypto?utm_source=rss_feed" target="_blank" rel="noopener nofollow">resulted</a> in losses of up to HK$11 million (US$1.4 million). The arrests are part of ongoing efforts by law enforcement to combat the rise in crypto-related scams in the region.
<h3 id="scam-masterminds-arrested">Scam masterminds arrested</h3>
Chief Inspector of the Commercial Crime Bureau, Lo Yuen-shan, revealed on July 28 that the latest arrests bring the total number of individuals apprehended in connection with these scams to 14 since October of last year. 
The suspects, aged between 14 and 39, were detained on July 26, on charges of conspiracy to defraud, possessing, and using 5,000 counterfeit banknotes.
The police detailed the structured nature of the syndicate, with specific roles assigned to each member. Two of the suspects were identified as the masterminds responsible for procuring the fake banknotes from a mini storage facility in Mong Kok, while the masterminds disguised a nearby location as a legitimate business. 
By impersonating a well-known cryptocurrency investor, they attracted victims with offers above the current market price for digital currencies. They also targeted potential victims online.
Related: <a href="https://cointelegraph.com/news/crypto-exchange-grace-period-unchanged-hong-kong-despite-scandals">Crypto exchange grace period to remain unchanged in Hong Kong despite scandals</a>
The scheme involved inviting victims to the fake store, where they were shown stacks of counterfeit HK$1,000 ($128) banknotes. Only the top and bottom notes were real, a tactic to deceive victims into believing the entire stack was genuine. The suspects prohibited the victims from untying the stacks, insisting on online transactions to settle the deal.
<h2 id="financial-fraud-in-hong-kong">Financial fraud in Hong Kong</h2>
Once the cryptocurrency was transferred, the scammers swiftly moved the assets out of the account and refused to pay, leaving the victims nothing. Chief Inspector Lo noted that these tactics were common in recent cases, with the group and others defrauding 12 victims of HK$11 million (US$1.4 million) from October 2023 till the arrest.
The arrests highlight the ongoing battle against financial fraud in Hong Kong, particularly involving digital currencies. 
Meanwhile, a worldwide manhunt is underway for two well-known <a href="https://cointelegraph.com/news/global-manhunt-underway-jpex-promoter-coin-young-master">Hong Kong crypto influencers</a>, previously linked to the embattled JPEX exchange in Dubai, as they face allegations of theft, fraud, and money laundering, prompting Interpol to take action.
Magazine: <a href="https://cointelegraph.com/magazine/hong-kong-bitcoin-etf-launch-in-top-20-strk-scam-suspect-busted-asia-express/">Hong Kong Bitcoin ETF launch in ‘top 20%,’ STRK scam suspect busted</a>

HK police arrest 4, including teen, in HK$11M crypto fraud

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