Cryptocurrency Becoming More Popular, Fraud Techniques Evolve
“Baby, look, this coin has been rising sharply recently. I’ve been following my mentor’s advice, and I’ve already made several times my initial investment! You should try it too, I guarantee it will make you financially free very soon.” On the screen, sweet words accompanied by the fluctuating cryptocurrency candlestick chart, as the “online lover,” whom Xiao Fang had just met, launched a series of tempting attacks.
Longing for love and wanting to increase her income, Xiao Fang, under the enthusiastic guidance of the other party, gradually stepped into the meticulously set “pig killing plate” trap. From initially investing small amounts to later investing her entire savings, Xiao Fang saw her account balance constantly climbing, with the dream of wealth within reach. However, when she finally tried to withdraw her earnings, she realized it was all 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 widespread adoption of cryptocurrency, various fraud techniques have also followed suit.
The Director of the Cybercrime Prevention Division of the Criminal Investigation Bureau, Lin Jianlong, stated that according to police statistics, fraud cases in Taiwan reached a peak in August 2024, with financial losses amounting to NT$13.8 billion in a single month. Among these, fake investment and dating scams accounted for the vast majority, and there was a clear positive correlation with the rise and fall of cryptocurrency prices.
Although there was a decrease earlier this year, the overall amount of fraud remains quite staggering, and the number of victims is high. On average, around 400 to 500 fraud cases occur every day. Lin Jianlong said, “In the past, being defrauded of one million dollars was already considered a high amount, but now it’s common for people to lose 10 million, 30 million, 50 million, and even over 100 million. This is a very serious issue.”
Current Cryptocurrency Crimes in Taiwan: Fake Investments and Fake Dating Scams Most Common
“Door-to-door payments, door-to-door cryptocurrency dealers, all scams!” Red banners with slogans like these can be seen almost everywhere in Taiwan, yet the number of victims remains alarmingly high.
Lin Jianlong highlighted several types of cryptocurrency crimes that are currently rampant in Taiwan. The most common is through fake investments and fake dating, where after establishing a relationship, scammers lure victims into purchasing cryptocurrencies by promising high returns. In addition, scams such as fake job offers and fake loans not only defraud victims of small amounts of money but often turn their accounts into money laundering conduits.
Akabr Akhtar, the Head of the Asia-Pacific Investigations Department at Binance, also pointed out that cryptocurrency fraud and money laundering issues are not exclusive to Taiwan, but each country faces different situations. Among the most common hybrid fraud techniques are rug pulls, pig killing plates, and romance scams, which are prevalent in various countries.
Akbar mentioned that many fraudsters come from overseas, as they believe this allows them to evade investigations from cross-border jurisdictions. Because of this, each country inevitably attracts criminal activity, and these criminals often tailor their fraud strategies to target each country’s weaknesses. “This is not only happening in Asia; it’s also happening in Europe, the Middle East, Africa (EMEA), and the Americas,” he said.
Challenges in Investigating Cryptocurrency-Related Cases
As technology continues to advance, the techniques used by fraud rings have also “evolved.” What once was confined to traditional financial sectors has now cleverly combined blockchain and cryptocurrency technologies, making fraud and money laundering methods more diversified and difficult to prevent.
This not only makes it difficult for victims to distinguish between real and fake, but it also presents unprecedented challenges for law enforcement in investigating cases.
Challenge 1: New Technologies and Concepts like Blockchain
Cryptocurrency is a completely new field for many law enforcement personnel. Concepts like blockchain technology, wallet addresses, and transaction tracking must be learned from scratch. Additionally, criminal groups use tools like mixers and cross-chain technology to increase the difficulty of tracing, making it harder to track the flow of funds on the blockchain compared to traditional finance.
Regarding the new types of fraud involving blockchain technology, Lin Jianlong said, “For many investigators, they don’t know what blockchain is, and they don’t know why transactions are moving from one place to another, or why they are going through several layers. They have no idea. In the past, we only had traditional finance, but now we also have cryptocurrencies developed through blockchain technology, which requires expertise in information technology to handle more effectively.”
As cryptocurrency-related cases have become increasingly serious over the past three years, Lin Jianlong mentioned that in 2023, around 80 people were trained in cryptocurrency flow analysis by the Criminal Investigation Bureau, and over 500 people in police stations across Taiwan were trained in cryptocurrency analysis to address these technical challenges.
Challenge 2: Complex Blockchain Fund Tracking
When investigating cryptocurrency fraud cases, tracking funds on the blockchain can also become a major challenge.
Lin Jianlong observed that the tactics used by fraud groups are constantly evolving. In the past, traditional finance utilized ATM offline methods to create breaks in the money flow or kept large sums of cash at home. Now, fraudsters transfer the funds obtained from exchanges to multiple non-custodial wallets. He referred to these types of wallets as “on-chain vault wallets,” and they mainly use stablecoins like USDT.
Challenge 3: Cryptocurrency Crimes Have No Borders
If fraud groups use stablecoins or centralized exchanges to deposit or withdraw fiat currencies, the police can cooperate with the stablecoin issuer or the exchange to help freeze funds or accounts, preventing further transfers or withdrawals by the fraudsters.
However, when the funds are transferred to foreign exchanges, law enforcement often faces situations where they “can’t find anyone” or the exchange is unwilling to cooperate. “For example, there are exchanges in Cambodia, and fraud groups often launder money there, but of course, they are not willing to cooperate with us,” Lin Jianlong said helplessly.
Cooperation Between Exchanges and Law Enforcement
As cryptocurrency crimes become more rampant, cryptocurrency exchanges, which sit at the core of digital asset flow, play an increasingly important role. Exchanges are not only the primary platforms for users to buy and sell and trade but may also become the channels for criminals to launder money and transfer illicit funds. Because exchanges hold vast amounts of user information and transaction data, they have become key partners for law enforcement in fighting cryptocurrency crimes.
Currently, when Taiwan police investigate international cryptocurrency crimes, they cooperate with exchanges in the following key ways:
Data Requests
This is the most common form of cooperation. When Taiwan police suspect that a particular international cryptocurrency crime case is related to users of a specific exchange, they send a formal legal request to the exchange, asking for KYC (Know Your Customer) information for the involved accounts, including user identities and contact details. This helps the police trace the source and destination of funds and identify the suspects.
Asset Freezing
When the police have sufficient evidence to suspect that an exchange account or wallet is involved in criminal activities, they request the exchange to freeze the assets in the account or wallet to prevent further transfers or withdrawals by the criminals.
Lin Jianlong stated that apart from domestic operators, international exchanges like Binance and OKX have also cooperated to freeze assets in some cases. For example, in recent creative private housing cases and the “Taiwan version of Cambodia case,” Binance actively cooperated with the investigation and helped law enforcement freeze and transfer illicit assets.
Intelligence Sharing and Analysis Assistance
Exchanges usually have rich trading data and risk control systems that can identify suspicious trading patterns and account activities. Taiwan police may share case information with exchanges and ask them to assist in analyzing the data to identify potential criminal clues or accomplices. Akbar also mentioned that Binance proactively analyzes suspicious activities and shares them with law enforcement.
Training and Knowledge Exchange
Many domestic and international exchanges provide training on cryptocurrency and blockchain technology to law enforcement agencies, helping improve investigation capabilities. This knowledge exchange helps law enforcement better understand how cryptocurrency crimes operate and enables more effective collaboration with exchanges.
Regarding Binance’s cooperation with law enforcement, Akbar stated that last year (2024), Binance responded to nearly 65,000 law enforcement requests globally, including more than 2,000 from Taiwan, showing 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 can reflect the “relative” level of law enforcement activity. If Country A makes more law enforcement requests than Country B, it does not necessarily mean Country A has more cases. In fact, Country B might have a higher crime rate but cannot allocate resources to investigate cases for various reasons (such as a lack of manpower).
In addition, Binance has actively cooperated with law enforcement agencies worldwide in recent years, responding not only to data requests, asset freezes, and seizure requests but also proactively offering training on cryptocurrency investigations, including in Taiwan.
Akabr Akhtar, Head of the Asia-Pacific Investigations Department at Binance (first from the right)
Lin Jianlong also believes that such international exchange opportunities are quite valuable for Taiwan. “I always tell my colleagues, you may not necessarily learn any specific technology, but you can understand what others are doing, and most importantly, you establish future cooperation relationships and channels.”
In the future, as cryptocurrency continues to become more widespread, the number of crimes may also increase. However, Akbar emphasized that the industry, law enforcement agencies, and regulators are all working hard to curb this trend.
Furthermore, Taiwan is gradually strengthening its cryptocurrency regulation. From initially incorporating anti-money laundering measures to the current registration system, the next step will move toward a licensing system. Under a clearer licensing framework in the future, this public-private sector collaboration is expected to deepen, jointly addressing the increasingly complex challenges of cryptocurrency crime and creating a healthier environment for cryptocurrency industry development.