Rise of “Point Running” Crypto Scams in China
What is “Point Running”?
In recent months, a new type of cryptocurrency scam known as “point running” has emerged in China. This scheme involves moving digital assets through various accounts and promising participants that they will earn rewards or commissions. Often, victims are new to cryptocurrencies and believe they are simply processing transactions. However, they are unwittingly being used as money mules to launder funds for illicit operations.
Case Study: A Victim’s Experience
A recent case highlighted by the Public Security Bureau involved a local resident named Wang. Wang was introduced to a WeChat group by a friend and persuaded to invest in USDT (referred to as “U” coins). Initially, Wang invested 8,000 yuan (about $1,125). After seeing minor returns, he increased his investment to over 300,000 yuan ($42,112). When he attempted to withdraw his funds, he received a screenshot confirming the transaction, but the money never arrived. Wang ultimately lost 280,000 yuan ($39,305).
Authorities’ Warnings
Chinese authorities have issued warnings about the increasing prevalence of these scams. As more people become familiar with cryptocurrencies, they are more susceptible to these fraudulent schemes. Victims are often lured by promises of high returns with minimal effort. However, these scams not only result in financial loss but are also frequently linked to money laundering activities.
Indodax Hack and Damage Control Efforts
Indodax’s Response to the Hack
On September 11, Indodax, a major cryptocurrency exchange, suffered a hack resulting in a $22 million loss. In response, the company launched a giveaway campaign on Instagram to ease customer concerns. The campaign promises to give out 3 million rupiah (almost $200) every hour to participants who engage with posts by the exchange and its CEO, Oscar Darmawan.
Ongoing Investigation
The hack targeted various cryptocurrencies, including Bitcoin, TRX, POL, and other ERC-20 tokens. Security firm SlowMist reported the incident, and Indodax has since shut down for an investigation. Customers are now awaiting the results of this investigation to understand the full extent of the damage and any potential reimbursements.
Similar Incidents
This hack comes nearly two months after WazirX, another major exchange in India, suffered a $230 million exploit. WazirX has since requested a six-month reprieve from the Singapore High Court to reorganize its debts. Both incidents highlight the ongoing vulnerability of cryptocurrency exchanges to cyber-attacks.
Human Trafficking and Pig Butchering Scams in Southeast Asia
Rise of Pig Butchering Scams
According to crypto compliance firm AMLBot, pig butchering scams are on the rise in Southeast Asia. These scams involve gaining victims’ trust through romantic manipulation and eventually extracting funds. In August alone, these scams accounted for $3.2 million in victim losses, up from $1 million in July.
Human Trafficking Angle
AMLBot’s investigations revealed that these scams are often orchestrated by large syndicates based in Cambodia, Myanmar, and the Philippines. Chinese crime lords run many of these syndicates. There is also a disturbing human trafficking angle, where children from India and Nepal are kidnapped and forced to work in scam operations.
Money Laundering Through Huione Pay
In the past, criminal proceeds from these scams were typically laundered through crypto exchanges. However, they are now funneled through Huione Pay, a foreign exchange business owned by Huione Group. This company also operates the Huione Guarantee marketplace, which has become a preferred platform for scammers. According to crypto forensics firm Elliptic, merchants on Huione Guarantee have transacted over $11 billion.
Shift in Scam Strategies
Chainalysis, another forensics firm, has noted a shift in scam strategies. Scammers are increasingly moving away from elaborate Ponzi schemes to quicker, more targeted scams like pig butchering. These scams often target individuals on social media, making them more difficult to detect and prevent.
Blockchain Technology in Education
Philippine Science High School’s Blockchain Initiative
The Philippine Science High School (Pisay) is set to adopt blockchain technology to manage and verify student records. This initiative, developed by the
