When crypto assets are stolen, they can be moved across the globe in minutes, a feature that makes recovery seem impossible. So, can they be recovered in Hong Kong? The answer from its legal system is increasingly a definitive yes. As a hub for both financial innovation and sophisticated fraud, Hong Kong’s courts have met this challenge by formally recognizing digital assets as property. This critical step has unlocked powerful remedies for victims, providing a crucial line of defense against the recent and alarming surge in cryptocurrency scams.
The Rise of Cryptocurrency Scams in Hong Kong
In recent years, Hong Kong has witnessed a troubling and sustained increase in crypto-related fraud. According to the Hong Kong Police Force, the number of reported cases involving virtual assets rose from 2,336 in 2022 to 3,415 in 2023. In 2024, the trend of high-value deception continued. Deception cases, of which crypto scams are a significant part, rose by nearly 12% in 2024. This underscores the growing risk for investors and the prevalence of sophisticated schemes. Common types of scams include:
- Investment Scams: Fraudsters promise high returns on non-existent crypto investments.
- Phishing Scams: Attackers trick victims into revealing private keys or login information.
- Rug Pulls: Developers abandon projects after collecting investors’ funds, leaving them with worthless tokens.
Legal Framework for Crypto Asset Recovery in Hong Kong
The legal foundation for crypto asset recovery in Hong Kong was firmly established by the landmark High Court decision in Re Gatecoin Limited, which formally recognized cryptocurrencies as property. This classification is critical, as it allows victims to pursue proprietary remedies against their stolen assets. The key legal and regulatory frameworks include:
- The Crimes Ordinance: This remains a primary tool for the criminal prosecution of fraud and theft.
- The Organized and Serious Crimes Ordinance (OSCO): This ordinance grants law enforcement broad powers to investigate complex crimes and freeze the proceeds of illegal activities, including digital assets.
- The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO): This ordinance provides the regulatory framework for virtual assets in Hong Kong. It established a mandatory licensing regime for Virtual Asset Trading Platforms (VATPs), which came into effect in June 2023. This regime enhances investor protection and creates a formal structure for cooperation with licensed exchanges during investigations.
Steps to Take Immediately After Discovering Crypto Theft
If you discover that your crypto assets have been stolen, take the following steps:
- Document the IncidentGather all relevant information, including transaction records, wallet addresses, and communications with the scammer.
- Report the TheftContact local law enforcement agencies to file a report. Providing detailed documentation can aid investigations.
- Notify Cryptocurrency ExchangesInform the exchanges or platforms involved in the transaction. They may be able to freeze accounts or provide additional assistance.
Remedies Available for Victims of Stolen Crypto Assets
Victims of crypto theft have several legal remedies:
- Injunctions to Freeze Stolen Assets
Hong Kong courts offer powerful injunctions to prevent fraudsters from moving stolen assets beyond reach. Victims can typically apply for two key types:
- Proprietary Injunction: This order freezes the specific stolen assets. Because cryptocurrency is now recognized as property, a victim can assert ownership over the exact crypto that was taken, allowing them to trace it even if it has been moved to a different wallet.
- Mareva Injunction (or Freezing Order): This is a broader order that freezes the fraudster’s other assets (such as bank accounts or physical property) up to the value of the stolen crypto. It is particularly useful when the specific stolen assets cannot be directly traced or have already been converted into another currency.
- Civil LitigationPursuing civil action against known or unknown perpetrators is an option. Courts in Hong Kong may grant orders against “Persons Unknown” to assist in asset recovery.
Recover Your Crypto Assets with Sphere State
Consulting with legal professionals experienced in crypto asset recovery is vital to navigate the complexities of the legal landscape. Be cautious of fraudulent recovery services that prey on victims, promising quick fixes for a fee.