Transnational cybercrime gangs in Southeast Asia continue to grow
Transnational cybercrime gangs in Southeast Asia continue to grow, expanding their reach through crypto and custom blockchain services, the UN reports.
Cybercrime syndicates in Southeast Asia are really stepping up their game, and crypto is right at the heart of their growing scams. Even though authorities have been cracking down, these criminal networks are spreading globally, creating a tangled mess from Myanmar to Mexico, according to a United Nations report.
The data shows that Southeast Asia has become home to some of the world’s largest and most profitable cybercrime operations, with cryptocurrency playing a central role. According to the report, the regional cyberfraud industry has outpaced other transnational crimes, given that it is easily scalable and able to reach millions of potential victims online.
The report estimates that up to $37 billion was lost to cyber fraud in East and Southeast Asia alone in 2023, with a significant portion of those losses linked to crypto scams. Benedikt Hofmann, the UN’s acting regional representative for Southeast Asia, told Reuters in a commentary that the operations spread “like a cancer.”
Shady stablecoins
The shift, largely facilitated by the pseudoanonymity and global reach of cryptocurrencies, has made it increasingly difficult for governments to contain the issue. As law enforcement intensifies its efforts in known scam centers, networks are simply relocating to more remote locations or moving operations online, often using technologies like Starlink satellite internet to bypass government crackdowns.
“This [scale of Southeast Asia’s scam network] has extended far beyond the construction and management of physical scam centres to include online gambling platforms and software services, unlicensed payment processors and cryptocurrency exchanges, encrypted communications platforms and, most recently, stablecoins, blockchain networks, and illicit online marketplaces, often controlled by the same criminal networks.”
The United Nations Office on Drugs and Crime
In the report, the UN also highlighted the growing use of illicit cryptocurrency exchanges to fuel these scams. One such platform, Huione Guarantee — now rebranded as Haowang — has become a central hub for cyber-enabled fraud.
The platform, which is linked to Cambodia and several other countries, has processed tens of billions of dollars in cryptocurrency transactions since 2021, the report reads. It has become so big, it has even recently launched a range of its own cryptocurrency-related products including a cryptocurrency exchange and trading application, online gambling platform, blockchain network, and even “U.S. dollar-backed stablecoin designed to circumvent government controls,” the report reads.
The scale of this cybercrime network is staggering
As of the latest data, Huione Guarantee has grown to more than 970,000 users, many of whom are involved in illicit activities ranging from online gambling to large-scale fraud. According to the UN’s report, Huione Guarantee vendors have received inflows totaling at least $24 billion over the past four years.
Crypto scams expand their reach
The rise of platforms like Huione Guarantee and their use of cryptocurrency highlights the growing intersection of digital currencies and global cybercrime. These platforms act as one-stop shops for criminals, offering the technology, infrastructure, and financial tools needed to execute large-scale scams.
The growing use of crypto in scams is not just limited to Southeast Asia though. Criminal gangs are collaborating with networks in South America, Eastern Europe, and Africa, expanding the reach of their fraud operations, the UN alarms. In the U.S. alone, crypto-related scams, including “pig butchering” schemes, led to over $5.6 billion in losses in 2023, the data shows.
The report claims that Southeast Asia has become a breeding ground for online crimes mainly due to its relatively weak governance in certain areas. The criminals are exploiting regions with high levels of corruption and limited law enforcement capacity, making it easier for their operations to thrive. This has led to the establishment of massive scam compounds in countries like Myanmar, Cambodia, and Laos, with tens of thousands of trafficked individuals working under forced conditions.
The UN report identifies victims from more than 55 countries, mostly from Asia and Africa, who are exploited in scam operations where trafficked individuals are forced to trick others into sending money, often through cryptocurrency.
The report also warned that despite ongoing efforts to shut down scam operations, the syndicates are adapting. “[…] several competing entities with known criminal ties have been observed expanding their virtual asset service businesses,” the UN report noted, highlighting that these new platforms are emerging on messaging services like Telegram.
The developments have prompted international calls for more robust cooperation among governments to combat the growing threat posed by cybercrime syndicates as failure to address the problem “would have unprecedented consequences for Southeast Asia that reverberate globally,” the UN warned.