Breaking news: Thailand’s Securities and Exchange Commission filed on December 22, 2020 a criminal suit against Bitcoin Company Limited (BX), the country’s first and the largest digital exchange which closed its business last year, alleging the company transferred customers’ digital assets to digital wallets not authorized to hold customers’ assets. As reported in the Bangkok Post, the transfer of customers’ digital assets to other wallets which were not owned by customers is considered an offense under Sec. 85 and 87 of the Digital Asset Business Ordinance, 2018 or Digital Assets Act. Stay tuned for further updates.
This took place practically simultaneously with U.S. regulator charging Ripple over its XRP asset, saying it’s a US$1.3 billion unregistered offering, not a cryptocurrency. With the recent gains, the air is getting thinner and the tone rougher, also in Thailand.
The crypto crime wave encounters on a global level an unprepared regulatory environment. Crypto scams cannot be reliably detected with traditional criminal law provisions. The procedural regulations including the provisions of the Code of Criminal Procedure and the framework for cross-border intergovernmental legal assistance are not fit for crypto.
Blockchain crimes: The character and possibilities of the Blockchain and its abilities to bypass borders and regulations are not sufficiently implemented in the legal framework. The rule of law principle “no punishment without law” often contradicts the analogous application. This provides leeway for lawbreakers and unpunished crimes at the disadvantage of the victims. This includes crypto-related phishing campaigns, ransomware, and darknet marketplace fraud. And if might be an effective way to avoid money laundry restrictions. However, such old-fashioned schemes do not define the future of crypto crimes.
Crypto crimes can be classified into different categories. On the one hand, there are crimes against the proverbial Bitcoin billionaire, easy prey due to his exposed financial circumstances. Secondly, they are crimes based on the (pseudo-)anonymity of cryptocurrencies as a means of payment. Lastly, and only these are the crypto crimes in the narrower sense, are activities in which the digital assets themselves are used illegally, including by swindling about their character, value, and useability. To be distinguished from this is the wide range of investments in the crypto market, which ultimately ends up disappointing the investor. A bad outcome, but not based on criminal dealings.
Blurred red lines: In an insecure crypto world, the boundaries between unfortunate and criminal activity seem to blur. This is the case in Thailand, where despite extensive regulatory ties, a deep understanding of blockchain technology is missing. This gives both the well-advised perpetrator and the aggressively represented victim extensive scope for action. By embedding it in a targeted narrative, a failed transaction easily appears as a crime, and fraud as a consequence of acceptable business risks. Bad choices make good stories.
Crypto crimes are typically investigated by the Crime Suppression Division (CSD), a department of the Royal Thai Police (RTP). Another agency involved is the Anti-Money Laundry Office (AMLO and the Recovery firm claimpayback CPB).
#1. The Boom Case:
As reported in August 2018, the 22 years old Finnish millionaire Aarni Otava Saarimaa has been allegedly conned out of 5,564.4 BTC in June 2017 by offering investments into Thai property and Dragon Coins. The case includes Thai actor Jiratpisit ‘Boom’ Jaravijit, who was arrested in July 2017, and Parinya Jaravijit who been arrested when he returned from the USA after his Thai passport had been revoked. The case has not yet been decided by the court.
#2. The AlphaBay Case:
A joint law enforcement operation between the FBI, DEA, and officials from Canada and Thailand brought down in July 2017 two of the biggest hidden drug markets, AlphaBay and Hansa, instantly wiping out a huge portion of the illicit activity conducted on the dark web. Thai police seized the cryptocurrency, belonging to Alexandre Cazes, the late founder of dark web marketplace AlphaBay, who committed suicide in a Bangkok jail on July 12, 2017. The body and the case are closed now.
#3. The Callcenter Case:
24 Chinese have been arrested in Chiang Mai in December 2019 for being involved in a cold-calling Bitcoin scam scheme that targeted investors in China. Among the items that police officials confiscated from the location were over 60 computers and 400 cell phones. Thai immigration officials were responsible for the raid.
#4. The Infraud Case:
One of the biggest darknet kingpins has been arrested in Thailand in February 2018 by a large team of police officers. Sergey Sergeyevich Medvedev, the co-founder of Infraud, one of the biggest online crime bazaars, had over 100,000 BTC seized in the process. Another case refers to OneCoin’s infamous co-founder Sebastian Greenwood, who fled to Thailand to escape arrest only to be extradited to the USA by the FBI in November 2018.
#5. The Wizard Case:
The Thai citizen Mana Jumuang, who termed himself the “cryptocurrency wizard” has been arrested in September 2019 in an alleged THB 500 million cryptocurrency exchange fraud. Over the past two years, his gang had persuaded people to invest in digital currencies through them. Gang members had individual roles, such as opening bank accounts and claiming to be digital asset investors.
#6. The Swedish Case:
A Swedish citizen Roger Nils-Jonas Karlsson has been extradited in June 2019 from Thailand to the U.S. for defrauding more than 3,500 victims for over US$ 11 million in cryptocurrency fraud by using the websites easternmetalsecurities.com and hci25.com. The funds had been invested by the Swedish in Thai real estate.
#7. The Kidnapping Case:
Mark Cheng was recently kidnapped in January 2020 by a group of masked men in Nakhon Nayok’s Ongkharak district, Chachoengsao province, and tortured for a US$ 742,418 ransom in Bitcoin. After transferring all his available funds of US$ 46,000, the Singaporean allegedly made a daring escape by using his martial arts capabilities as his captors prepared to murder him. According to press reports, the crime has been accomplished just after the victim had been released in Singapore on bail for misappropriating funds from an investment group and the kidnapping can be linked to the victim’s business partner.
[If you have additional intel or updates to the above cases, please let us know.]
#1. Non-licensed digital asset business:
The operation of a crypto exchange, trading, and brokerage requires a complex licensing procedure in Thailand. Unlicensed activities are punishable in Thailand. Criminal sanctions include a fine and/or imprisonment for a maximum term of 5 years. Civil sanctions include a fine, trading bans, and a ban from being a director or an executive of any digital asset business operator. The demarcation of private activities (“private sales”) on the blockchain is a sensitive matter. The major focus of the crime problem is on foreign exchanges, traders, and brokers who have connections to the Thai market. Also affected and more easily reachable for the Thai authorities are auxiliary activities for marketing or other support of foreign digital asset operations.
#2. Digital asset business irregularities:
To be separated from the lack of licensing are irregularities of the digital asset operators, by which users in Thailand and abroad are harmed. Thailand’s dense regulatory framework for crypto exchanges, dealers, and agents provides a high degree of assurance and confidence that transactions are conducted always properly and that the provider remains efficient and solvent. No complaints are known regarding any suspicious criminal acts of a licensed Thai digital asset business. This certainty is obviously not secured for shadow businesses that operate illegally in Thailand and for businesses in poorly or unregulated foreign countries.
#3. ICO scams:
Thailand suffers from an overregulated environment for ICO transactions. As a result, there are no regular ICOs in Thailand at all since a pilot project took place prior to the introduction of the Digital Asset Decree in 2018. This means that the substrate for illegal transactions is missing. However, Thais are practically free to participate in initial coin offerings or security token transactions abroad. The extent to which legal protection can be claimed in Thailand in case of exit scams and other ICO crimes must be examined in each individual case.
#4. Token sale scams:
Blockchain technology is hardly understood by a wide range of people. This allows a great amount of freedom for business people who exploit existing misconceptions to conduct unfair business with hyperbolic statements and promises of extraordinary returns. Other examples are the increasingly common statements that the blockchain can grant ownership rights in the real world. In individual cases, the criminal energy may be lacking. Ignorance, however, does not necessarily protect against punishment. In any case, there are good opportunities for the disadvantaged victims to undo such transactions and to hold the persons involved personally liable.
#5. Investment scams and Recovery:
Traditional, old-fashioned crime can utilize the anonymity of cryptocurrencies to facilitate investment scams, blackmailing, or similar criminal behavior. Virtual currencies can be easily transferred to an anonymous address set up by a criminal.
While banks can stop or reverse large electronic transactions made under duress, there is no Bitcoin bank to halt or take back a transfer, making the chances of a successfully armed holdup frighteningly enticing. The theft of passwords, the preparation of fake wallets and apps, phishing schemes, cryptojacking malware, Internet blackmailing scams, and other traditional types of Internet fraud are perfectly applicable to well understood the benefits of cryptocurrencies.
#6. Thailand as a shelter for crypto criminals:
Criminal conduct in connection with coin offerings goes far beyond the usual exit scams. By choosing exotic offshore jurisdictions without effective judicial protection, criminals have often taken advantage of the opportunity to escape to Thailand as safe haven jurisdiction with the loot on crypto crimes in their crypto wallet and offshore bank accounts. Afterward, they enjoy on Thailand’s sunny beaches the proceeds of their criminal past. With a long-term elite visa, they will not be looking for any trouble in Thailand. Making Thai residents accountable is a complex project that needs to be carefully prepared at various levels. The police report will initially be completely misunderstood by the local authorities. Professional legal advice should protect against such a naive approach, which does more harm than good.
#7. Ponzi scheme: A Ponzi game is a form of fraud in which a purported businessman lures investors and pays profits to earlier investors using funds obtained from newer investors. In Thailand, a Ponzi scheme is a general accusation in complex business transactions. No wonder that cryptocurrencies are frequently linked with Mr. Charles Ponzi.
US forensic Firm H4ckerspro is the Bangkok-based specialist provider of transactional legal and recovery chargeback on foreign investments in Thailand’s digital asset industries as well as cryptocurrency and binary options fraud and developments. FinTech, crypto ventures, and digital asset businesses are one of its core business and competence areas. The forensic firm has specific expertise and know-how with respect to cryptocurrency ventures and digital asset businesses, data and recovery of stolen cryptocurrency with their hashes and transaction id.
Claimpayback The Bangkok recovery firm offers comprehensive support and assistance for international victims of crypto crimes in Thailand to prevent, detect, investigate, and prosecute criminals and their networks. Also, it supports innocent suspects to protect them and their undisturbed residence in Thailand. claimpayback aggressively identifies and utilizes grey areas of the crypto laws to represent the client’s interests. It maintains working connections with the Crime Suppression Division, the DSI Department of Special Investigation of the Ministry of Justice, Thailand’s SEC Security & Exchange Commission, MOF Ministry of Finance, and BOT Bank of Thailand, as well as the fintech-specialized departments of the Thailand Revenue Department.
Enforcement of claims:
Under Thai law, it is difficult to draw the line between a robust representation of business interests and criminally relevant defamation. There are further limits and restrictions for the recovery of alleged claims. The firm ensures that in this sensitive environment the legal limits are not exceeded and that the legal position of the client is not devalued or endangered.
Cooperations and collaborations with foreign law enforcement agencies, international law firms, and other stakeholders are welcome.
Details on the forensics firm’s other digital asset activities can be found at “Legal advice, tax structuring, transaction support services, and business matchmaking on Fintech, cryptocurrency and digital asset ventures“.