Hong Kong Police Launch CryptoTrace to Combat Rising Cryptocurrency Crime

In a significant step toward strengthening digital financial security, Hong Kong's Cyber Security and Technology Crime Bureau (CSTCB) has unveiled "CryptoTrace," an advanced virtual asset analysis tool designed to combat the growing threat of cryptocurrency-related crimes. Developed in collaboration with the University of Hong Kong, this new forensic platform aims to provide law enforcement with enhanced capabilities to investigate virtual asset crimes in an increasingly complex digital landscape.

A New Weapon Against Crypto Crime

CryptoTrace offers "advanced intelligence and investigation support to crime investigation units," according to the CSTCB. The development comes as Hong Kong faces mounting challenges from cryptocurrency scams, with reported losses reaching a staggering HK$24.2 billion (approximately US$3.1 billion) in just the first ten months of 2024, according to legal firm Titus.

To prepare officers for this new technological approach to crime-fighting, the CSTCB conducted specialized virtual asset investigations and CryptoTrace training sessions in March. These courses were specifically designed to strengthen the capabilities of frontline officers in handling complex virtual asset cases.

Technology at the Core of CryptoTrace

The University of Hong Kong, which partnered with the CSTCB to develop CryptoTrace, has equipped the platform with advanced blockchain analytics, graph technology, and visualization tools. These sophisticated features enable investigators to:

• Track laundered cryptocurrency funds across various wallets and blockchain networks
• Identify and potentially geolocate suspects based on transaction behavior patterns
• Simplify complex investigations, particularly those involving decentralized platforms

These technological capabilities are expected to significantly reduce investigation time and increase successful prosecution rates for cryptocurrency-related crimes.

Rising Threats in Hong Kong's Digital Asset Space

The launch of CryptoTrace comes against a backdrop of increasing cyber threats targeting Hong Kong's growing cryptocurrency sector. In October 2024, Hong Kong police shut down a criminal operation running a HK$360 million (US$46.35 million) cryptocurrency investment scam.

The government has also recently exposed a sophisticated scam involving a fake "National Hong Kong Coin," which misled the public into believing that an official government digital currency was soon to be launched.

Despite these challenges, Hong Kong maintains its position as the world's second-most crypto-friendly city, according to the latest Crypto Report 2025 by migration platform Multipolitan. This highlights the delicate balance the city must maintain between fostering innovation and ensuring security in the digital asset space.

CSTCB's Broader Mission and Stakeholder Engagement

Beyond the development of CryptoTrace, the CSTCB has been actively engaging with stakeholders across various sectors. Chief Superintendent Lam Cheuk-ho emphasized the emerging threats in the crypto sector during his speech at the Cyberport Blockchain Security Conference 2025, held in April.

During this conference, he stressed "the importance of exchanges, regulators and law enforcement agencies sharing responsibilities" in maintaining the integrity of the digital asset ecosystem.

Additionally, Chief Inspector Yan Ngan Hoi-yan provided analysis on trends and cases related to anti-money laundering in crypto-related crimes, further highlighting the bureau's focus on understanding and addressing these evolving threats.

CSTCB officers also participated in a summit hosted by the Blockchain Compliance Professionals Association, where they shared their perspectives on Hong Kong's Web3 sector. They offered a "multi-faceted analysis" from a law enforcement viewpoint and emphasized their commitment to collaborating with stakeholders to build a safer and more sustainable Web3 ecosystem."

A Collaborative Approach to Digital Security

The CSTCB has made it clear that they intend to continue strengthening collaboration with stakeholders across all relevant sectors. According to their statement, they will "uphold its mission of protecting the security of Hong Kong's digital sector, and strive to build a secure, resilient and responsible virtual asset ecosystem."

This collaborative approach marks a significant shift in how law enforcement addresses cryptocurrency crime, recognizing that effective solutions require cooperation between public agencies, private companies, and academic institutions.

Looking Forward: A Model for Other Jurisdictions

With CryptoTrace, Hong Kong is positioning itself as a leader in crypto crime prevention and digital asset regulation. As blockchain technology continues to evolve and integrate into the global financial system, Hong Kong's proactive approach could serve as a template for other jurisdictions facing similar challenges with cryptocurrency-related crime.

The development of specialized tools like CryptoTrace represents a new chapter in digital policing—one where law enforcement capabilities evolve alongside technological innovation to maintain security in an increasingly complex digital financial landscape.

By bringing together advanced technology and multi-stakeholder cooperation, Hong Kong's CSTCB is demonstrating that effective responses to cryptocurrency crime require both cutting-edge tools and collaborative frameworks that span across sectors and institutions.