Spike in cryptocurrency crimes – The Star Online

CRIMES involving virtual money, or cryptocurrencies, are on the rise, and victims in Malaysia are suffering bigger losses to scammers and cybercriminals.

From RM4.9mil in 2019, the total amount of losses from victims have more than tripled to RM18.3mil as of September this year, based on police statistics made available to Sunday Star.

For the past three years, a total of 500 investigation papers were opened to probe these incidents.

Each year, more cases are reported, with the number of investigation papers rising from 131 in 2019 to 225 as of September this year.

The most common type of crime involving cryptocurrencies are scams that deal with buying and selling these digital currencies.

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Cases usually happen when victims pay the suspects to buy cryptocurrency but do not get anything in return, says Bukit Aman Commercial Crime cryptocurrency crime investigation unit officer, Asst Supt Nur Adli Md Saari.

In such cases, victims transfer their money to the suspects bank account but do not receive any cryptocurrency.

There are also victims who pay using cryptocurrency to the suspects e-wallet or cryptowallet in exchange for another currency, but also end up with nothing.

Another top type of crime is fraudulent investment schemes, where scammers entice victims to make investments with alleged high returns by using such digital currencies as the medium.

The victims then realise they have been conned after failing to receive the promised returns or when they discover that the scheme is fake.

These cases are investigated under Section 420 of the Penal Code for cheating, explains ASP Nur Adli.

Under this section, those found guilty can be punished with a jail term of between one and 10 years, whipped and fined.

Other types of crimes involving cryptocurrencies are cryptowallet hacking, cryptomining scams, ransomware and fraudulent initial coin offering.

ASP Nur Adli was a speaker at a forum called The Crypto Talk, organised by the Centre Of Digital Assets Malaysia (Codam) at Kuala Lumpur.

Codam is a private centre that aims to train and educate more Malaysians especially the younger generation on blockchain technology and cryptocurrency.

For the uninitiated, cryptocurrency is a form of virtual currency that can be used to buy goods and services.

Its secured by cryptography to prevent double-spending or counterfeit, and made possible by blockchain technology, which is a decentralised ledger of all transactions across a peer-to-peer network.

As such, these digital currencies are not issued by any central authority.

Currently in Malaysia, cryptocurrencies such as Bitcoin and Ethereum are not regulated by the government.

Bank Negara Malaysia has stated that digital currencies are not legal tender here meaning, it cannot be legally accepted for the exchange of goods or services in Malaysia.

However, the Securities Commission has considered digital assets like cryptocurrency as securities under its laws.

Victims lack knowledge

On why crimes involving such virtual money are on the rise, ASP Nur Adli says there is now more interest and involvement among the people in cryptocurrency in Malaysia.

But cases happen when consumers lack proper knowledge about the trade and how it works.

Nevertheless, the police are planning to beef up the fight against such crimes.

ASP Nur Adli says the polices cryptocurrency crime unit, which was set up in 2018, will be expanded to boost efforts in cracking down on such cases.

The unit is currently run by a team of 17 officers divided into two zones to cover the entire Malaysia.

At times, we face challenges because the technological landscape changes and evolves very rapidly.

There are also some limitations in getting more information or cooperation from cryptocurrency exchangers based in other countries, he adds.

Malaysia Cyber Consumer Association president Siraj Jalil says the low literacy about the nature of cryptocurrencies among Malaysians allows such crimes to increase.

Many Malaysians misunderstand the fundamentals of cryptocurrencies and as a result, they become the target of scammers who exploit that weakness.

For instance, many people today still think that Bitcoin is some kind of a scheme, and one has to join or become a member in such schemes in order to get high returns from their investment.

There is no such thing as joining a scheme or buying from a middleman to acquire your own crypto since there are many exchangers available in the market where one can convert their fiat (money) to cryptocurrency by themselves, he says.

The fact that transactions are all done online makes it harder to prove a crime or produce evidence, especially when involving cash in hand, Siraj adds.

The SC has registered four Recognized Market Operators (RMOs) to establish and operate digital asset exchanges (DAX) in Malaysia.

Entities which have not been approved by the SC are required to cease all activities.

The updated list of RMOs can be found on https://www.sc.com.my/regulation/guidelines/recognizedmarkets/list-of-registered-digital-asset-exchanges.

To avoid being a victim of cryptocurrency scams, ASP Nur Adli advises the public to use the platforms registered under the SC.

Avoid buying peer-to-peer cryptocurrency from individuals whom you have not met before or have found on social media like Telegram, Facebook and Instagram.

Buy only from licensed DAX, he says.

He also advises the public not to be deceived by cryptocurrency investment schemes that promise multiple-fold returns.

Always do your own research or consult experts if you wish to invest in a newly launched cryptocurrency, he adds.

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Spike in cryptocurrency crimes - The Star Online