Personalized Crypto Scam in China: “Send it to this wallet” Transforms into “Give it to this guy”
A woman in Xuzhou, Jiangsu Province, China, fell victim to a deceptive scheme that involved a fake relationship, phony cryptocurrency, and real cash transactions, losing over $55,000. The scammer presented himself as an investor in USDT and even sent a collector to her home. Currently, five suspects have been apprehended, and the inquiry continues.
As per an official notice from local authorities, the victim was first approached by a man claiming to be a soldier. Through various military regulations supposedly barring the use of WeChat, he convinced her to download another app to communicate privately.
Over time, their exchanges became more intimate. He fabricated a story about a military friend who, after retiring, accessed privileged data in the state-run Tobacco Bureau, claiming they had profited significantly from investments, and invited her to participate.
The scammer provided a counterfeit “China Tobacco” investment platform, insisting that deposits be made in USDT stablecoin, also known as “U Coin” in China. When she expressed doubts about converting her money to crypto, he offered her a local exchanger who could handle the transaction at her home.
Throughout three different in-person meetings, the victim handed over more than 400,000 yuan without ever receiving cryptocurrency in return. Authorities have categorized this hybrid scam — combining online manipulation and on-the-ground cash collections — as a rising concern in crypto fraud within mainland China.
Bitcoin Mining Front for Illegal Arcade Discovered in South Korea
South Korean police have uncovered an illegal arcade disguised as a cryptocurrency mining operation. This case flips the usual dynamic seen in crypto-related illegal businesses, where mining activities often pose as other types of businesses to evade regulatory scrutiny.
The local authorities reported that a suspect has been charged for breaching the Game Industry Promotion Act for managing an illicit gaming venue set up to look like a crypto mining facility. In South Korea, arcades that can convert game points into cash are illegal, particularly when operated without a license.
The person in charge had modified arcade machines to appear as cryptocurrency mining rigs while registering players as “members.” Players were instructed to create personal crypto wallets, despite no actual cryptocurrency involvement. The wallets and crypto jargon were merely a ruse to legitimize the gaming operation.
The games available were essentially altered versions of free mobile applications, repackaged for arcade use. When players generated points, they utilized a purported “coin app” that acted as a payout mechanism mimicking crypto transactions. In reality, players entered their banking details, and cash was transferred directly, with a 10% fee deducted, confirming no blockchain activity.
Investors Turn to USDT as Local Currency Depreciates
As the Korean won declines over 10% against the US dollar in the last six months, an increasing number of local investors are opting for stablecoins like USDT to safeguard their assets. A recent survey by Hashed Open Research revealed that 37.7% of surveyed stablecoin investors indicated their primary reason for acquisition was to hold US dollars.
The report illustrates a growing trend of retail investment in dollar-denominated assets amidst the weakening of the local currency. Previously, South Koreans primarily accessed US dollars through banks and foreign exchange services; now, stablecoins offer domestic or international access to dollar exposure.
While 60.7% of participants reported using stablecoins primarily for trading, dollar exposure was the second most common reason. This trend is gaining traction across various demographics and not just among speculative investors.
Other noteworthy motivations included earning interest through deposits (24.3%) and executing kimchi premium trades (30.3%), where traders capitalize on price discrepancies between South Korean and global crypto markets. Currently, deposit yields on platforms like Binance hover around 4%, compared to 1% to 2.5% for savings accounts in Korean won.
USDT remains the most widely held stablecoin (94%), followed by USDC (40%), with smaller percentages in DAI (22%), Ethena’s USDe (21%), and PayPal USD (18%). The significant interest in emerging products like USDe and PYUSD suggests Korean investors are keen on trying various stablecoin options.
Hong Kong Approves Staking with Parental Oversight
The Securities and Futures Commission (SFC) of Hong Kong has officially sanctioned staking services by licensed crypto exchanges and funds. Virtual asset trading platforms are required to secure written approval from the SFC prior to offering such services.
Previously, local exchanges were prohibited from delivering staking services. Under the new policy framework, staking can be conducted, but only under strict conditions. These include mandatory direct control of client assets and full disclosure of risks linked to validator failure, blockchain issues, and lock-up periods.
Staking opportunities will also extend to crypto funds, though they must do so via SFC-licensed trading platforms or authorized institutions, including limitations imposed on the volume of staking to manage liquidity risk.
This initiative signals Hong Kong’s gradual embrace of staking as part of its ambition to establish itself as a global digital asset hub. Nevertheless, the region is adopting a cautious approach, aiming to be viewed as a safe environment for regulated entities rather than a free-for-all.
“Expanding the range of regulated services and products is essential for the healthy growth of Hong Kong’s virtual asset ecosystem,” noted Julia Leung, the SFC’s CEO. “Such expansion must occur within a regulatory framework that prioritizes the safety of client virtual assets.”
