Hong Kong police recently cracked down on a fraud group that used the slogan of investing in "London gold and cryptocurrency". The suspects used low-risk, high-return rhetoric to attract Hong Kong citizens to open accounts and invest, and at least 25 victims fell into this scam. The police said that 19 men and women have been arrested so far, and the case involved a turnover of up to HK$320 million. Hong Kong tycoon Zhong Peisheng also revealed in 2020 that he almost fell into the London gold fraud trap, with the amount reaching HK$1 million.
It is reported that the Hong Kong police launched an arrest operation last Wednesday and Thursday, that is, from August 30 to 31, during which they conducted searches at multiple locations in Hong Kong. They uncovered an investment company in Kowloon, which was the headquarters of the above-mentioned fraud group, and arrested a total of 12 men and 7 women aged between 25 and 42 for money laundering and conspiracy to defraud.
Chief Inspector Duan Yuheng of the Hong Kong East Kowloon Regional Crime Unit said that the fraud group started operating in June 2022. First, the group leader instructed members to set up an investment company, rent an office in a commercial building, and set up a website to create a false illusion. At the same time, in order to avoid tracking by the police and victims, the company will be closed after a period of time, and then a new company will be re-established. During the pyramid scheme, group members will lie that they are experienced senior investment brokers to deceive victims into participating.
However, Duan Yuheng pointed out that once the victims were deceived, the members claimed that they could collect the investment funds in cash or through transfers from a specific account, and then use some applications (APP) to enthusiastically help the victims open accounts. Some victims were even persuaded to sign authorization letters, authorizing brokers to handle their "investment accounts" with full authority.
In fact, these applications and investment accounts are just simulated trading platforms. None of the victims' money was invested in London gold or cryptocurrencies. They just made up various scenarios to defraud the victims' money. One of the methods is that the fraud group will conduct abnormal and frequent transactions in the account and hold certain assets for a long time in order to charge high handling fees and holding fees, resulting in the loss of all the principal in the victim's account.
Finally, they used rhetoric to encourage investors to increase their investment amount, claiming that they could make back their losses in a short period of time, in order to drain every penny out of the victims’ pockets. When the victims wanted to withdraw their principal, the group would refuse with various reasons, such as requiring them to pay a high administrative fee before processing. In addition, the group also laundered money between fake companies and puppet accounts through multiple decentralized transfers.
Nowadays in Hong Kong, the so-called "London Gold" has become synonymous with fraud, because it is a non-physical market and a derivative product, and trading venues are scattered across various sales networks to form an "invisible gold market". Due to the lack of supervision in Hong Kong, there is no need for any license to buy and sell London Gold, which greatly increases the opacity and risk. Since 2018, scammers have used beautiful brokers and promotional videos of famous brands and sports cars, and also used frequent trading techniques, falsely claiming that the transaction commission has caused the investment to be completely lost, leaving the victims with nothing. Buying and selling itself is not a so-called fraud, but because the threshold is too low, it is targeted by a large number of unscrupulous elements, so there are many fraud cases.