As cryptocurrency scams around the world continue to trick people in parting with their hard-earned money, police in Hong Kong have arrested three men who are allegedly tied to a HK$230,000 (US$30,000) bitcoin scam.
According to a report from the South China Morning Post (SCMP), the three men are believed by authorities to be part of a larger group, which has scammed bitcoin ATMs out of the thousands of dollars.
The scam, which the media outlet claims to be the first case of its kind in the city, has come to light after two cryptocurrency exchanges filed reports in recent days, suspecting that the fraudsters were taking advantage of ‘loopholes’ in the ATM, which allowed them to withdraw the cash despite not having official authorisations.
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In Hong Kong, bitcoin ATMs allow authorised personnel to purchase bitcoin by cash or credit card. In some instances, the machines will also allow crypto to be sold for cash. According to SCMP, police have refused to elaborate further on how exactly the scammers were able to exploit the loopholes in the machines.
On Saturday, superintendent Wilson Tam Wai-shun of the cybersecurity and technology crime bureau said: “I cannot reveal what the loopholes are. But any bitcoin transaction needs verification. Maybe the ring bypassed the verifying process before taking the money. We have offered security advice to the two companies and believe they will upgrade their systems. It is the first time we came across fraud linked to bitcoin ATMs.”
Fraudsters Hit 6 ATMs in Bitcoin Scam
According to Tam, the three men that were arrested are believed to be the ‘core members behind the syndicate’. Collectively, authorities believe they withdrew HK$226,000 cash in total from six separate bitcoin ATMs in 11 transactions, SCMP said. The biggest hit on one machine was HK$54,000.
The efforts to arrest the three men took place on Thursday and Friday in Mong Kok, Kowloon. They were arrested for conspiracy to defraud.