Intro

For many crypto investors and traders in Hong Kong, the promise of digital-assets brings opportunity — but recent enforcement shows a harsh truth: you can be both a victim and a suspect. One moment you believe you’re participating in a legitimate trade; the next you may face inquiries from law enforcement under the Organised and Serious Crimes Ordinance (OSCO) or allegations of fraud.
Here at TITUS we have helped clients who never intended wrongdoing, yet find themselves in the middle of complex crypto investigations. This article explains how that happens, what you should do, and why you need specialised legal support.

Why the Victim ↔ Suspect Line Blurs in Crypto

The mechanics behind investigations

According to the Hong Kong Police Force (HKPF), money-laundering operations in HK sometimes use bank accounts + crypto exchange accounts to process crime proceeds. For example, one ring laundered approx. HK$118 million using 500 “mule” bank accounts and crypto exchange conversion.
A real victim may have transferred funds in good faith, but that payment touches or originates from what becomes a flagged account — this can prompt investigations under OSCO’s “dealing with proceeds of crime” provision (s.25).
Investigations can escalate rapidly: for example, the unlicensed exchange JPEX case in 2023 saw thousands of victims and losses over HK$1.5 billion; investors who thought they were legitimate users ended up part of a police inquiry.

Two typical patterns where you may be a victim and a suspect

Good-faith transaction becomes tainted – You traded tokens with someone you knew, later payment comes via a different account, and it turns out that different account is linked to fraud. Although you believed you were trading normally, you may face a “dealing” investigation.
Platform failure / freeze triggers risk – You invested in a platform that collapses or is unlicensed. Your assets or bank account get frozen. Even as a victim of the collapse, you may be treated as a suspect (or at least your funds may be subject to investigation) because of the nature of the transactions and tracing required.

Legal Framework in Hong Kong: Key Offences & Risks

Legal Provisions	What They Mean	Potential Penalties*
OSCO s.25 – Dealing with proceeds of crime	If you know (or ought reasonably to know) that property represents the proceeds of crime, then dealing with it is an offence.	Up to 14 years’ imprisonment and HK$5 million fine.
OSCO s.25A – Failure to disclose suspicion	If you know or suspect and fail to disclose to an authorised officer, you may commit an offence.	Up to 5 years’ imprisonment.
Theft Ordinance s.16A – Fraud	Dishonest deception causing loss to another; often used in crypto-fraud cases.	Up to 14 years’ imprisonment.
Bank / Exchange Account Freezes	Not an offence per se — but under s.25 investigations and bank-account “no consent” mechanisms can lead to funds being held while authorities investigate.

* Penalties vary by case; always seek legal counsel.

Importantly: Even if you were unaware of wrongdoing, the question becomes: “Should you have known?” The “reasonable grounds to suspect” test is central in money-laundering investigations.

Warning Signs That Could Trigger Being Investigated

Your bank account receives or sends funds connected to an account later flagged by authorities.
A crypto platform with unverified licence status, unclear KYC, or sudden change of terms.
Multiple transfers from or to third-party wallets/accounts you did not originally contract with.
Your tokens or funds are frozen by the platform or bank without clear explanation — signalling that the institution may be under investigation.
You’re asked by a platform or counterparty to handle funds for someone else, or act as intermediary — opening risk of being a “mule” account.
You cannot withdraw or request further transparency in relation to your trades or payments.

What to Do Immediately if You Realize You Might Be Under Investigation

Stop all movement of the questioned funds or tokens. Further transactions may aggravate your exposure under OSCO s.25.
Assemble your file: transaction records, wallets, counterparties, verification you performed, communications. Showing you acted in good faith is key.
Engage proper legal counsel experienced in crypto-fraud/money-laundering in Hong Kong. You need a firm like TITUS which understands both victim-and-suspect dynamics.
Communicate carefully: Before commenting to banks, exchanges or investigators, know your position. Unsuitable responses may harm your case.
Consider defending the narrative: If allegations are looming, you may need to evidence that you were a victim, not a conspirator — but timing is crucial.

Why TITUS Is Your Go-To Legal Partner in These Scenarios

We have deep expertise in fintech and crypto legal frameworks, including cross-border token transactions and asset freezes.
We combine investigations/dispute-resolution capability with regulatory/defence experience—helping clients who start as victims but face suspicion.
We understand the Hong Kong enforcement environment (HKPF, OSCO, LNC regimes) and how to manage banks/exchanges in frozen-fund scenarios.
We can work as your single point of contact for all legal angles—preserving your position, navigating disclosure decisions, and mounting a coherent defence if required.

Call to Action

If you believe:

You invested in crypto and are now seeing freezes or being contacted by law enforcement;
You transferred or received funds that may now be under scrutiny;
You’re unsure whether you’re a genuine victim or now treated as a suspect …

Contact TITUS immediately.

WhatsApp: +852 9720 3003
Tel: +852 3702 0045
Email: info@titus.com.hk

Address: Suite 4002, 40/F, Lippo Centre Tower 1, 89 Queensway, Admiralty, Hong Kong

Can You Be a Victim and a Suspect? Understanding Crypto Fraud Investigations in Hong Kong