3 arrested in Hong Kong over alleged BTC ATM scam

3 arrested in Hong Kong over alleged BTC ATM scam

Police in Hong Kong have arrested three people who they claim are members of a gang that stole close to $30,000 from BTC ATMs in the city. The three allegedly exploited loopholes that allowed them to bypass the security protocols, authorities said.

Police began the two-day investigations into the ATM theft after two digital currency exchanges filed reports, a South China Morning Post report reveals. The exchanges claim that the thieves took advantage of loopholes in the ATMs and withdrew cash without official authorization.

The criminals are alleged to have withdrawn HK$230,000 (US$29,675) in 11 transactions from the ATMs in what the local authorities described as the first crime of its kind in Hong Kong. Their largest withdrawal amount from a single machine was $6,970.

The police declined to disclose further details about the crime, including what loopholes the criminal exploited. Wilson Tam, the city’s cybercrime bureau superintendent stated, “I cannot reveal what the loopholes are. But any bitcoin transaction needs verification. Maybe the ring bypassed the verifying process before taking the money.”

The police are however working with the ATM companies to enhance their security, Tam claimed. He added, “We have offered security advice to the two companies and believe they will upgrade their systems. It is the first time we came across fraud linked to bitcoin ATMs.”

Police seized six smartphones belonging to the three criminals as well as some cash they believe is part of the proceeds from the ATM theft. The investigations are ongoing, with Tam claiming there could be more arrests in the coming days.

Hong Kong’s digital currency ATM industry has continued to grow, with the city boasting of the most ATMs in Asia. According to Coin ATM Radar, there are 57 ATMs in Hong Kong, twice as many as there are in second-placed Georgia.

As the digital currency ATM industry grows across the globe, the challenges have also risen, the most common being theft and fraud. A week ago, German authorities seized ATMs operated by Shitcoins Club, claiming that the company was operating without a license. There have also been several cases of fraudsters targeting novice digital currency users through the ATMs.

In one curious case in Washington, the thieves dismounted the ATM and took it home, and the crime wasn’t discovered for a week.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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