Hong Kong’s Wong Tai Sin District Crime Unit has successfully dismantled a local cryptocurrency money laundering syndicate in an operation codenamed “Lian Dou,” which ran from September 19 to 26, according to PANews. This crackdown resulted in the arrest of 25 individuals linked to at least 39 fraud cases, with the total amount defrauded exceeding HKD 7 million. Among those arrested were the syndicate’s mastermind, three key operatives, and 21 account holders, all facing charges of “obtaining property by deception” and “money laundering.”

Police investigations revealed that this cryptocurrency laundering scheme had been active since May 2023, involving numerous fraudulent activities across Hong Kong. The syndicate employed false identities to open both bank and cryptocurrency exchange accounts. Each key member had specific roles, employing various fraudulent tactics to trick victims and deposit the illicit funds into designated “puppet” bank accounts.

Once the money was in these accounts, some key members utilized the same false identities to create exchange accounts for peer-to-peer (P2P) transactions, using the stolen funds to purchase cryptocurrency. The “cleaned” cryptocurrency was then transferred to the mastermind’s exchange account, often using the same platform or cold wallets for added concealment. Investigators also found that the syndicate set up accounts on exchange platforms through shell companies to further obfuscate their identities. This “money in, cryptocurrency out” method, along with the use of shell companies, posed significant challenges for law enforcement during the investigation.