Australia and US team up to dismantle $100 million Chinese FX and Crypto scam

Rick Steves

The Australian Federal Police has charged four Chinese nationals living in Sydney as part of an investigation into an organised criminal syndicate involved in a cyber-enabled investment scam that has resulted in more than US$100 million in losses world-wide.

Aged 27, 24, 19 and 19, the four men have been charged with proceeds of crime related offences, and are scheduled to next appear in Downing Centre Local Court in January 2023.

The scam involves the unlawful manipulation of legitimate electronic trading platforms, normally licensed to foreign exchange brokers who then provide the software to their clients.

FX and Crypto trading apps manipulated for false profits

The United States Secret Service (USSS) notified the AFP-led Joint Policing Cybercrime Coordination Centre (JPC3) about Australian links to the predominantly US-based scam in August 2022. AFP Cyber Command then began a parallel investigation – codenamed Operation Wickham – in cooperation with an investigation by the New South Wales Police Force.

The results of this investigation have so far resulted in the AFP-led Criminal Assets Confiscation Taskforce restraining $22.5 million in 24 bank accounts allegedly linked to the criminal syndicate. Investigations into the true scope of the fraud on potential Australian victims are ongoing.

The organised crime syndicate employs a sophisticated mix of social engineering techniques, including the use of dating sites, employment sites and messaging platforms to gain the victim’s trust before mentioning investment opportunities.

The victims are then directed to both fraudulent and legitimate investment applications that deal in foreign exchange and cryptocurrency, which have been maliciously manipulated to show a false positive return on investments.

The syndicate recruits victims to subscribe to a financial investment service, and manipulates the data provided through the legitimate application to encourage further investment, while concealing the fact their money has actually been stolen.

More than US$100 million in losses world-wide

An analysis of victim reports by police has identified more than US$100 million in losses world-wide attributed to this organised crime syndicate, with the majority of victims being based in the United States.

AFP Cybercrime Operations Eastern Command investigators identified the syndicate was using Chinese nationals living in Australia, predominantly students, to undertake a variety of activities to build the infrastructure required to facilitate their fraudulent activities.

It will be alleged in court the four people arrested were used to register Australian companies with the Australian Securities and Investments Commission (ASIC), to enhance the legitimate appearance of fraud efforts, and also establish Australian business bank accounts to launder the proceeds of crime.

Investigators from NSW Police and AFP Cybercrime Operations Eastern Command executed a search warrant at the residence of two Chinese nationals in Pyrmont on Thursday, 20 October 2022. NSW Police officers charged the men, both 19, with one count each of recklessly dealing with proceeds of crime, contrary to section 193B(3) of the Crimes Act 1900 (NSW).

Two further Chinese Nationals alleged to be Australian ‘controllers’ of the syndicate were arrested by AFP investigators on Thursday, 24 November 2022, at Sydney and Melbourne Airports while attempting to leave Australia on flights to Hong Kong, which had been purchased as one-way tickets.

Two men, aged 27 and 24, were each charged with one count of dealing in proceeds of crime etc.—money or property worth $10,000,000 or more, contrary to section 400.2B(4) of the Criminal Code (Cth). The maximum penalty for this offence is 15 years’ imprisonment.

Utmost caution if cold-approached online or on the phone

AFP Cybercrime Operations Eastern Command Detective Sergeant Salam Zreika said greater numbers of people are falling victim to these types of cyber-enabled scams every day and, in some instances, losing their life savings.

“It is essential people exercise the utmost caution if cold-approached online or on the phone by people trying to sell financial or investment services. Criminals are ruthless and will stop at nothing to take your money,” she said.

“Refrain from investing in foreign exchange, crypto-currency or speculative investments with people you’ve only ever encountered in the online environment. If you are unsure, get a second opinion from a professional, in-person.”

Det-Sgt Zreika said criminals in Australia are using a network of remittance businesses controlled by overseas shadow entities to offset the value of criminal funds, enabling the movement of illicit cash in Australian dollars overseas.

The AFP-led CACT is targeting similar alleged activity in this matter by obtaining restraining orders in the NSW Supreme Court for over 24 bank accounts relating to Operation Wickham, which hold a mixture of Australian and foreign currency totalling about $22.5 million.

NSW Police Sydney City Police Area Commander, Detective Superintendent Martin Fileman, said scams are becoming increasingly sophisticated, with many of the victims were among the most vulnerable in the community.

“The people behind these scams have zero concern for those members of the community who may have lost their lifesavings or have been financially crippled. People need to take extra care need to protect themselves: the old adage, if it sounds too good to be true, it probably is,” he said.

US Secret Service Attaché Ike Barnes said, “this joint investigation between the Australian Federal Police and the US Secret Service is a prime example of collaboration in law enforcement’s effort to combat transnational organized criminal organizations attempting to exploit international boundaries in the hope of avoiding detection and arrest”.

Read this next

Institutional FX

Invast Global ramps up its offering with 10 soft commodity CFDs

Sydney-based prime-of-prime provider Invast Global has expanded its offering with the addition of ten soft commodity CFDs, which increases their index and commodity CFD offering to 35 instruments.

Retail FX

FF Simple and Smart Trades says Goodbye to CySEC authorization

The Cyprus Securities and Exchange Commission (CySEC) confirmed that it has wholly withdrawn the Cyprus Investment Firm (CIF) licenses of FF Simple and Smart Trades Investment Services Ltd.

Crypto Insider

Shining the Light in Crypto’s Dark Places

Something changed in regulators’ minds after the November crash of the FTX crypto exchange.

Executive Moves

Financial Commission Adds Sam Low to Dispute Resolution Committee

The Financial Commission (FinaCom PLC), a dispute resolution service that caters to the financial services industry, has appointed Sam Low as the newest member of its Dispute Resolution Committee (DRC).

Digital Assets, Uncategorized

De-facto owner of Bithumb exchange arrested in South Korea

South Korean prosecutors have arrested Kang Jong-Hyun, the anonymous chairman and owner of the country’s largest cryptocurrency exchange, Bithumb, on charges of embezzlement and stock manipulation.

Retail FX

Interactive Brokers volumes snap three-month losing streak

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes rose in January, an indication that investor confidence in the financial markets is rebounding after having been fairly mixed over the past few months.

Digital Assets

VVF invests $5 million in Everscale, a potential Layer 2 solution for Venom blockchain

“For us, this is a strategic investment aimed at the technological development of projects and teams around technologies that we focus on and actively develop. In particular, we are talking about the Venom blockchain project and its ecosystem, which is planned to be launched soon and for which Everscale is a potential Layer 2 solution.”

Institutional FX

FXSpotStream volume ends string of declines on January rebound

Trading volumes on institutional FX platforms surged in January as traders increased their bets on central bankers’ policy with evidence mounting that inflation and economic growth are both losing momentum.

Industry News

DeFi firm Aurox launches SEC-compliant crowdfunding campaign on tZERO

“This is a great opportunity for us to raise capital from our community and the broader public on a leading fully regulated platform. We are confident that the tZERO Markets platform will provide us with the exposure and reach we need to attract a diverse investors to support our business growth.”

<