In a raid that once again reveals the dark side of cryptocurrency use, Hong Kong customs have busted a sophisticated money laundering operation, seizing assets and arresting multiple people.

According to the Hong Kong government’s press release, the operation to dismantle this money laundering scheme is called “Fencing” and specifically targeted a syndicate accused of laundering approximately $1.5 billion through shell companies and cryptocurrencies.

Details of the crypto-backed money laundering operation

The successful crackdown on the aforementioned money laundering activities took place on August 7, when Hong Kong Customs conducted a major operation and arrested four individuals linked to cryptocurrency-based money laundering activities.

As disclosed in the press release, these suspects, aged 31 to 66, are considered “key players” in the syndicate, which orchestrates complex transactions in the Asia-Pacific region.

The investigation revealed that from August 2020 to August 2022, the group managed suspicious funds worth approximately $1.5 billion and channeled them through various trading companies.

According to the press release, Hong Kong’s legal framework under the Organised and Serious Crimes Ordinance (OSCO) played a crucial role in the operation, with the suspects facing heavy penalties if convicted, including a fine of up to $5 million and up to 14 years in prison.

The report stated:

According to the OSCO, a person commits an offence if he or she deals with property knowing or having reasonable grounds to believe that such property, in whole or in part, directly or indirectly represents the proceeds of crime. The maximum penalty upon conviction is a $5 million fine and 14 years’ imprisonment, while the proceeds of the crime may also be confiscated.

Additionally, assets related to the crime, totaling approximately $2.2 million, have been frozen amid legal proceedings. The operation also included searches of multiple properties, with officers seizing evidence including cellphones, computers and cryptocurrency wallets.

As with any investigation, such items can be very useful to authorities in mapping the syndicate’s activities and accurately tracing the wider network that may be involved in these illegal activities.

Hong Kong: Ongoing Repression

Notably, this latest collapse is just one of many crackdowns that Hong Kong authorities have taken in recent months. As the global crypto market rapidly grows in acceptance, scammers continue to target this financial sector in every way possible.

Just last month, Hong Kong police arrested four people for their involvement in defrauding unsuspecting victims of counterfeit money.

Previously there was the Hong Kong Securities and Futures Commission (SFC) warned Investors should stay away from three entities suspected of engaging in fraudulent activities related to virtual assets or operating without a license.

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