Must-Know Crypto Investigations of 2023: Asia Pacific

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Must-Know Crypto Investigations of 2023: Asia Pacific

This week, we travel to the vibrant and diverse region of Asia Pacific, where 2023 has seen major strikes against crypto-related crime. 

“From money laundering in Singapore, Australia and Taiwan to frauds and scams in South Korea and Thailand, millions in illicit crypto activities were disrupted by law enforcement efforts,” said Matt (Billy) Humphries, TRM’s Director of Law Enforcement Relations for Asia Pacific and former digital forensics specialist at the Australian Federal Police (AFP). “A number of these successes were record-breaking. This reflects heavy investment in tools and training for crypto investigations, as well as effective public-private partnerships.”

1. Singapore police seize over $30 million in crypto in historic money laundering crackdown

In August 2023, the Singapore Police Force (SPF) arrested 10 individuals for their alleged involvement in laundering billions of dollars in ill-gotten gains from overseas organized crime activities such as scams and online gambling. The suspects were foreign nationals of Chinese origin, with alleged links to a gang from Fujian, China. The case came to law enforcement attention through suspicious transaction reports filed by financial institutions, highlighting red flags such as “suspicious fund flows, dubious documentation of the source of wealth or funds, as well as inconsistencies or evasiveness in the information provided.” The Monetary Authority of Singapore (MAS), which collaborated closely with SPF on the case, said that “supervisory engagements” were “ongoing” with the financial institutions involved, and that it would take “firm action” against institutions who breached MAS’ “stringent requirements” for AML/CTF.

The complex case involved multi-year investigations that culminated in simultaneous raids involving more than 400 police officers. Asset seizures quickly ballooned from an initial SGD 1 billion to more than SGD 3 billion by January 2024. They included cash, bank accounts, luxury properties and cars, gold bars and jewelry, and other luxury goods. 

In their initial raid, the police seized “11 documents with information on virtual assets.” The following month, SPF announced that they had seized cryptocurrencies of more than SGD 38 million, among other additional assets. At the same time, SGD 3.8 million was withdrawn from a crypto exchange account of one of the suspects while he was in police custody. SPF were alerted to these assets by foreign authorities.

“The magnitude of this case is historic for Singapore, and the inclusion of crypto assets in laundering efforts show how crypto increasingly features as a component in large financial crime cases. It is important that investigators are trained to look out for a crypto nexus in all their cases, as well as how to handle crypto seizures,” commented Angela Ang, TRM’s Senior Policy Advisor and former MAS Deputy Director. “For example, when it comes to crypto, unlike other assets, securing the physical item, whether it is a document with seed phrases or a physical cold wallet, does not mean seizing control of the underlying assets.”

The case is currently before the courts, and fresh charges continue to be filed. An inter-ministerial committee has also been convened to review Singapore’s money laundering regime.

2. South Australia police seize $1 million in crypto from dark web drug dealer

In September 2023, the South Australia Police (SAPOL) arrested an Adelaide man for allegedly peddling drugs on darknet markets (DNMs) under several profiles. During the operation, police seized AUD 1.5 million (USD 1 million) in cryptocurrencies, as well as tens of thousands in cash and large quantities of illicit drugs. DNMs are multi-vendor online illicit global commerce platforms located on the “darknet”, an encrypted section of the internet neither accessible from standard internet browsers nor indexed by search engines, and are the epicenter of the online crypto-mediated illicit drugs trade. The seized drugs included five kilograms of nitazene, a synthetic opioid similar to fentanyl, which is “highly toxic” with a “huge risk of overdose.” This was the largest quantity of nitazene seized in Australia to date.

“This case underscores the significance of law enforcement possessing robust capabilities and procedures for seizing cryptocurrency in the course of executing search warrants,” explained Mr Humphries. “It is essential for ensuring that complete possession and exclusive control of all legally seized crypto assets are managed strictly according to the search warrant's limitations. While it is true that in certain situations, law enforcement may lack the legislative backing to undertake such actions, the presence of thorough procedures encompassing crypto assets equips investigators with the means to operate at their highest efficiency.”

The following month, the New South Wales Police Force and the AFP also dealt another blow to drug money laundering. Police arrested seven individuals who were allegedly running an international syndicate that specialized in converting large amounts of cash to cryptocurrency on behalf of organized crime groups involved in the illicit drug trade. During the various search warrants, officers also seized cryptocurrency wallets and AUD 50,000 (USD 32,500) in cash.

“Law enforcement across Australia has invested heavily in crypto-related investigative capabilities, across both tools and training, and we are seeing these efforts bear fruit in the form of disruptions,” shared Jonno Newman, Global Investigator at TRM and former head of SAPOL’s cybercrime training and prevention section. “Arrests and seizures are often only part of the puzzle. Given their unique attributes, authorities have also developed specific protocols for the safe preservation and custody of digital assets,and use visualization tools such as TRM, to tell the story of cryptocurrency flows, in a court setting.”

3. Taiwanese police disrupt $320 million crypto money laundering ring

2023 also saw Taiwanese police disrupt a massive money laundering operation. In June 2023,  authorities arrested a Taiwanese man on suspicion of facilitating large-scale money laundering through cryptocurrencies. The suspect’s activities came to light in an earlier fraud case, where investigators found that he had assisted the suspects in laundering their ill-gotten gains using cryptocurrency, for a fee. Following the arrest and seizure of mobile devices, authorities discovered that his cryptocurrency wallets had processed more than 320 million in USDT since February 2022, including USDT 2.17million in illegally obtained funds. This is the largest ever amount laundered by a single individual, making it a historic disruption for Taiwanese law enforcement. 

4. Thai police shut down pig butchering scam network

In October 2023, the Royal Thai Police (RTP) busted a major cryptocurrency scam network with assistance from US Homeland Security Investigations (HSI) and crypto exchange Binance. The syndicate carried out pig butchering scams which affected more than 3,200 victims. Pig butchering scams are devastating long cons, where the scammers establish trust with their victim before taking them for all they are worth. Given the emotional investment and magnitude of financial loss, these scams are often devastating and drive victims into depression or even suicide.

Through information provided by its partners, the RTP was able to identify and arrest five key criminal syndicate members and seize approximately THB 10 billion (USD 277 million) in assets. Discussing the value of public-private partnerships, Police Lieutenant Colonel Thanatus Kangruambutr, Inspector of the Cyber Support Unit at the RTP’s High-Tech Crime Division, highlighted that “prompt information exchange with key partners” was integral to a successful operation.

5. Korean police disrupt million dollar crypto rugpull scheme

In November 2023, the Daegu Metropolitan Police Agency announced that it had arrested 25 individuals for their alleged involvement in a crypto scam that saw 4,000 victims suffer losses totalling KRW 18 billion (USD 13.5 million). The suspects had carried out a rugpull scam, luring their victims to invest in their token with the promise of huge gains once it was listed on a domestic crypto exchange. They had advertised the token through channels such as multi-level marketing, and social media. Victims were then left high and dry when the token was delisted shortly after its initial listing. 

Aside from the arrests, authorities also recovered KRW 9.5 billion (USD 7 million) in victim funds. 

What’s in store for 2024? With more crypto-specific investigative experience under their belt, investigators across Asia Pacific are more determined than ever to thwart illicit crypto activities. Last month, the Royal Malaysia Police (RMP) was able to arrest a hacker who had been selling stolen personal data on the darknet for crypto, within 24 hours of receiving a police report. Explaining that “everything which utilizes blockchain technology has a unique trait,” Datuk Seri Ramli Mohamed Yoosuf, director of the RMP’s Bukit Aman Commercial Crimes Investigation Department, said that crypto-related crimes were in fact “easily traceable.”

As law enforcement continues to build up investigative confidence in crypto-related crime, we definitely see more disruptions are on the horizon.

If you are a law enforcement officer wanting to expand your crypto investigative skills through learning and partnership with the global law enforcement community, join our law enforcement-only working group, LEO Labs, here

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