Asia Express: China’s ‘Point Running’ Crypto Scams and Kidnappings Linked to Pig Butchers

This week’s news roundup from Asia highlights significant developments within the cryptocurrency sector.

Rising Crypto Scams Targeting Chinese Investors

In China, an alarming new cryptocurrency scam, dubbed “point running,” is emerging, with many local investors falling victim, as indicated by a warning from the Public Security Bureau on September 10.

The term “point running” describes a scheme where victims are persuaded to transfer cryptocurrency between various accounts. Often inexperienced with digital assets, victims believe they are engaging in legitimate transactions to earn commissions.

These scams are often marketed as easy opportunities for side income, convincing participants to manually transfer digital currencies with the lure of profits. In truth, many victims unwittingly serve as intermediaries for laundering funds in illicit activities.

Recent variations of the scheme have victims transferring crypto to platforms that handle the “point running” automatically, making it seem effortless. Small initial gains entice individuals to invest larger sums.

For example, a local resident named Wang was introduced to a WeChat group, where he was encouraged to invest in USDT (“U” coins). Initially, he invested 8,000 yuan (about $1,125) and later increased his investment to over 300,000 yuan ($42,112) after seeing minimal returns. Ultimately, when he tried to withdraw his funds, he received a confirmation screenshot but never received his money.

Wang did receive a nominal commission of 2,000 yuan ($280) but ended up losing 280,000 yuan ($39,305).

Authorities caution that these scams are becoming increasingly widespread as more citizens gain familiarity with cryptocurrencies in China, despite the country’s stringent regulations against digital asset trading and mining.

Victims are often attracted by the appeal of high returns with minimal effort; however, these schemes not only lead to significant financial loss but are also commonly associated with money laundering, complicating the situation for those caught in them.

Indodax Launches Instagram Campaign Following $22 Million Hack

In response to a hacking incident that led to a loss of $22 million on September 11, Indodax has initiated a unique customer engagement strategy through a giveaway campaign on its Instagram account.

The platform claims to distribute 3 million rupiah (approximately $200) every hour to three winners chosen from participants in a comment competition responding to posts from both the exchange and its CEO, Oscar Darmawan. This initiative proceeds while the exchange is closed for an “investigation.”

Customers are currently awaiting updates from the investigation into the exploit, which reportedly targeted Bitcoin, TRX, POL, and various ERC-20 tokens, as detailed by security firm SlowMist.

This event follows closely on the heels of a $230 million hack suffered by WazirX, a prominent exchange in India.

WazirX, operated by Singapore-based Zettai Pte and its Indian subsidiary, has sought a six-month reprieve from the Singapore High Court, which would allow it to reorganize its financial obligations while protecting it from creditor claims.

Similar to WazirX, the North Korean hacking group Lazarus has been linked to the cyberattack on Indodax.

During the Seoul Defense Dialogue on September 11, South Korean Prime Minister Han Duck-soo emphasized the global security risk posed by North Korea’s thefts related to cryptocurrency.

He announced ongoing government efforts to establish “core strategic technologies” to prevent such cyber threats.

Human Trafficking Linked to Pig Butchering Scams in Southeast Asia

The prevalence of pig butchering scams, a deceptive method where fraudsters manipulate victims into emotional relationships to extract funds, is reportedly increasing across Southeast Asia, according to crypto compliance and investigation firm AMLBot.

In their investigations for August, pig butchering scams accounted for losses totaling $3.2 million, a significant rise from $1 million in July.

AMLBot’s statement indicated that large-scale pig butchering operations are currently based in Cambodia, Myanmar, and the Philippines, with Cambodian syndicates reportedly run by Chinese crime organizations.

The investigations uncovered connections to human trafficking, with children being kidnapped from India and Nepal, taken to Laos, and coerced into working within scam operations.

Historically, proceeds from these crimes were laundered through cryptocurrency exchanges; however, current methods involve the use of Huione Pay, a foreign exchange business linked to Huione Group, known for its multibillion-dollar marketplace, Huione Guarantee.

In July, crypto forensics firm Elliptic noted that Huione Guarantee has transformed into a significant online marketplace favored by pig butchering scammers in Southeast Asia, with transactions exceeding $11 billion.

AMLBot’s investigation parallels findings from forensics firm Chainalysis, which highlighted a shift among scammers from intricate Ponzi schemes to more expedient approaches like pig butchering, often targeting users on social media platforms.

Philippine Science High School to Implement Blockchain for Student Records

A leading public high school in the Philippines is set to adopt blockchain technology for the management and verification of students’ academic records, as reported by local broadcaster ABS-CBN here.

The Philippine Science High School (Pisay) believes that blockchain will enhance the efficiency of accessing and managing student records, traditionally requiring in-person visits by students and parents. This new system will provide secure and convenient online access to records, ensuring authenticity and integrity.

This initiative is backed by the Department of Science and Technology and aims to showcase blockchain’s potential for applications beyond cryptocurrencies.

Pisay’s digital certificate system is scheduled for testing in late 2024, with an expected broader rollout by 2025.

Various academic institutions have explored blockchain initiatives to secure academic certifications, following pioneers like the Massachusetts Institute of Technology, which created the Blockcerts program in 2017 to enable graduates to obtain digitally-secured diplomas.

Similarly, the University of Melbourne initiated the issuance of blockchain-based micro-credentials for employers to verify student achievements in 2017, further demonstrating the expanding footprints of blockchain technology in education.