Cryptocurrency Gradually Popularizes, Scamming Tactics Upgraded
“Baby, look, this coin has been rising sharply lately. I’ve been following the teacher’s operations and have already made several times my investment! You should try it too; I guarantee you’ll achieve financial freedom soon.” On the screen, sweet words accompanied by an ever-fluctuating cryptocurrency candlestick chart, a “cyber lover” who just met Xiao Fang launched a wave of temptation.
Desiring love while wanting to increase her income, Xiao Fang gradually stepped into the meticulously laid “pig-killing plate” trap under the enthusiastic guidance of the other party. From initially testing the waters with a small amount to later emptying her savings, Xiao Fang watched as the numbers in her account continuously climbed, as if the dream of wealth was within reach. However, when she finally wanted to withdraw her profits, she discovered that everything was just an illusion; the numbers on the website vanished like a mirage, leaving only endless regret and unbearable financial loss.
Xiao Fang’s experience is not an isolated case. With the popularity of cryptocurrency, various scamming tactics have emerged.
Director Lin Jianlong of the Technology Crime Prevention Center of the Criminal Investigation Bureau stated that according to police statistics, fraud cases in Taiwan peaked in August 2024, with a single month’s financial loss reaching NT$13.8 billion. Among them, fake investments and friendship scams accounted for the vast majority, showing a certain positive correlation with the fluctuations in cryptocurrency.
Although there was a decline earlier this year, overall, the amount of fraud remains astonishing, with a large number of victims. An average of about 400 to 500 fraud cases occur daily. Lin Jianlong mentioned, “In the past, being defrauded of a million NT dollars was already a high amount, but now it’s common to see amounts of 10 million, 30 million, or even 100 million. This is actually a very serious problem.”
Current Status of Cryptocurrency Crimes in Taiwan: Fake Investments and Friendship Scams Are Most Common
“Home collection, home currency services, are all scams!” Red banners with similar slogans can be seen almost everywhere in Taiwan, yet the daily number of victims remains high.
Lin Jianlong specifically pointed out several types of cryptocurrency crimes that are rampant in Taiwan today. The most common are scams through fake investments and fake friendships, where relationships are established first, and then victims are lured into purchasing cryptocurrencies with promises of high returns. Additionally, scams involving fake job offers, fake loans, etc., not only deceive victims of small amounts of money but often turn their accounts into fronts for money laundering.
Akabr Akhtar, head of Binance’s Asia-Pacific investigation department, also pointed out that cryptocurrency scams and money laundering issues are not unique to Taiwan; each country faces different situations. Among them, rug pulls, pig-killing plates, or romance scams are common mixed scam tactics worldwide.
Akbar stated that in these scam cases, many of the perpetrators come from overseas, as they believe this allows them to evade transnational jurisdiction investigations. Because of this, every country tends to attract criminal activities from perpetrators, and these criminals will tailor different scam strategies targeting the weaknesses of each country. “This is not only happening in Asia but also in Europe, the Middle East, Africa (EMEA), and the Americas.”
Challenges in Investigating Cryptocurrency-Related Cases
As technology continues to advance, the criminal methods of scam groups have also “upgraded.” What was once limited to traditional financial sectors has now cleverly combined with blockchain and cryptocurrency technology, making fraud and money laundering methods more diverse and difficult to prevent.
This not only makes it difficult for victims to discern authenticity but also presents unprecedented challenges for law enforcement in their case investigations.
Challenge 1: New Technologies and Concepts like Blockchain
Cryptocurrency is a completely new field for many law enforcement personnel. Concepts such as blockchain technology, wallet addresses, and transaction tracking must be learned from scratch. Additionally, criminal groups will use mixers, cross-chain tools, and other methods to increase the difficulty of investigations, making it more challenging to trace on-chain cash flows than in traditional finance.
Confronted with the new scam methods brought about by blockchain technology, Lin Jianlong stated, “For many investigators, they do not know what blockchain is or why a transaction would move there, sometimes going through several layers… these are completely unknown to them. Because in the past, there was only traditional finance, but now there’s also cryptocurrency developed from blockchain, requiring people who understand the information field to handle it more easily.”
As cases related to cryptocurrency have become increasingly severe over the past three years, Lin Jianlong mentioned that in 2023, around 80 personnel trained in coin flow analysis started in the Criminal Investigation Bureau, and last year over 500 personnel capable of cryptocurrency analysis were trained in police stations across Taiwan to tackle these technical issues.
Challenge 2: Complexity of On-Chain Fund Tracking
In investigating cryptocurrency crime cases, tracking on-chain funds can also become a significant challenge.
Lin Jianlong observed that the methods used by scam groups continuously evolve. In the past, they utilized traditional finance methods, such as creating cash flow breakpoints offline through ATMs and storing large amounts of cash at home. Now, they transfer funds defrauded from exchanges to multiple non-custodial wallets, which he refers to as “on-chain vault wallets,” primarily using the stablecoin USDT.
Challenge 3: Borderless Crimes in the Cryptocurrency Space
If scam groups use stablecoins or centralized exchanges for fiat inflows and outflows, the police can contact the stablecoin issuing company or the exchange to help freeze funds or accounts, preventing the scam group from making further transfers or withdrawals.
However, once funds are transferred to foreign exchanges, they often face situations of “not being able to find anyone” or exchanges unwilling to cooperate. “For example, there are exchanges in Cambodia where scam groups often wash their money, and they certainly wouldn’t be willing to cooperate with us,” Lin Jianlong expressed helplessly.
Cooperation Between Exchanges and Police
As cryptocurrency crime becomes increasingly rampant, cryptocurrency exchanges, which are at the core of digital asset flows, play an exceptionally important role. Exchanges are not only the main platforms for users to buy and sell but can also become channels for criminals to launder money and transfer illicit funds. Because they hold vast amounts of user information and transaction data, exchanges have also become key partners for law enforcement in combating cryptocurrency crime.
Currently, when Taiwanese police investigate international cryptocurrency crime cases, they cooperate with exchanges in several main ways:
Data Retrieval
This is the most common form of cooperation. When Taiwanese police suspect that an international cryptocurrency crime case is related to users of a specific exchange, they will issue a formal legal request to that exchange, asking for the KYC (Know Your Customer) information of the involved accounts, including user identity, contact information, etc. This helps the police track the source and flow of funds and identify suspects.
Asset Freezing
When the police obtain sufficient evidence suspecting that a certain exchange account or wallet is related to criminal activities, they will request the exchange to freeze the assets in that account or wallet to prevent criminals from transferring or withdrawing funds.
Lin Jianlong stated that currently, aside from Taiwanese operators, international exchanges like Binance and OKX have also cooperated in freezing assets.
For example, recently in cases like the Creative Private Room case and the “Taiwan version of the Cambodia case,” Binance actively cooperated with prosecutors and law enforcement agencies to freeze and transfer illegal assets.
Intelligence Sharing and Analytical Assistance
Exchanges usually possess rich transaction data and risk control systems, enabling them to identify suspicious trading patterns and account activities. Taiwanese police may share case information with exchanges and request their assistance in analyzing data to uncover potential criminal clues or accomplices. Akbar also mentioned that Binance proactively analyzes suspicious behaviors and shares findings with law enforcement.
Training and Knowledge Exchange
Many domestic and foreign exchanges provide training to law enforcement agencies regarding cryptocurrency and blockchain technology, helping the police improve their investigative abilities. This knowledge exchange helps law enforcement better understand the operational methods of cryptocurrency crimes and cooperate more effectively with exchanges.
Speaking about Binance’s cooperation with law enforcement, Akbar stated that last year (2024), Binance responded to nearly 65,000 law enforcement requests globally, including those from countries like the UK and the US, with over 2,000 requests coming from Taiwan, indicating the proactive nature of Taiwanese law enforcement in case investigations.
Law enforcement requests do not equate to the actual number of criminal cases or actual damages, but they can reflect the “relative” proactivity of law enforcement. If Country A submits more law enforcement requests than Country B, it does not necessarily mean Country A has more cases. In reality, Country B may have a higher crime rate than Country A, but due to different reasons (such as insufficient manpower), they may be unable to allocate resources for case investigations.
Additionally, in recent years, Binance has actively cooperated with law enforcement agencies worldwide, not only responding to data inquiries, asset freezes, and seizure requests from law enforcement but also proactively providing training in cryptocurrency investigations, including to Taiwan.
Head of Binance’s Asia-Pacific investigation department, Akabr Akhtar (far right)
Lin Jianlong also believes that such opportunities for international exchange activities are quite valuable for Taiwan. “I always tell my colleagues, you might not necessarily learn any specific technology, but you can see what others are doing. Most importantly, you need to establish cooperative relationships and channels for the future.”
As cryptocurrency becomes more popular, the number of crimes may also increase correspondingly. However, Akbar emphasizes that the industry, law enforcement, and regulatory bodies are all working hard to curb this trend.
Moreover, Taiwan is gradually strengthening its regulatory framework for cryptocurrencies. From initially incorporating anti-money laundering regulations to later implementing a registration system, the next step will be moving towards a licensing system. In the future, under a clearer licensing system, this collaborative effort between the public and private sectors is expected to deepen, jointly addressing the increasingly complex challenges of cryptocurrency crimes and creating a healthier environment for the development of the cryptocurrency industry.