Hong Kong banker jailed for 4 years after taking $470,000 in Tether to vouch for $1.6 billion in fake letters of credit

A former China Construction Bank (Asia) manager was jailed for four years in Hong Kong on September 18 for accepting more than $470,000 in Tether to authenticate fake standby letters of credit worth over $1.6 billion.

Lam Chun-yin, 32, pleaded guilty to conspiracy for an agent to accept advantages, and the ICAC said it has sought arrest warrants for others linked to the scheme.

How the crypto bribe was used to authenticate false letters

At the time of the offences, Lam worked in the Consumer Banking Division of CCB (Asia)’s Causeway Bay retail branch. His responsibilities covered retail banking services for individual customers and did not include processing business credit facilities or issuing letters of credit.

The crypto bribe arrangement emerged after Vesttoo Limited, an overseas financial technology company, operated a digital platform for insurance-related investment transactions. Investors using the platform were required to provide standby letters of credit issued by banks as guarantees.

Yu Po Holdings Limited became an investor on the platform in early 2022. According to the ICAC, a syndicate arranged for Lam to falsely present himself as CCB’s contact responsible for issuing standby letters of credit for Yu Po.

Between April and June 2022, Lam conspired with a Vesttoo department head and associates to receive more than US$470,000 in Tether. The crypto bribe was exchanged for his authentication of multiple standby letters of credit that falsely claimed to have been issued by CCB.

Two additional collateral letters purportedly issued by Yu Po and endorsed by CCB were also involved. Together, the false financial instruments represented more than US$1.6 billion.

The ICAC said neither CCB nor its sister companies had actually issued the standby letters of credit or collateral letters.

Crypto bribe payments raise wider compliance concerns

The case highlights how cryptocurrency can be used as a payment channel in corruption schemes involving conventional financial institutions. In this case, the crypto bribe was paid using Tether rather than conventional banking transfers.

The ICAC said corrupt individuals may attempt to use cryptocurrency to conceal illicit payments and make investigations more difficult. The anti-graft agency said it remained committed to detecting corruption involving digital assets and had sought arrest warrants for other people allegedly connected to the scheme.

The investigation began after CCB (Asia) discovered the irregularities internally and reported the matter to the ICAC. The bank subsequently provided assistance to investigators.

The crypto bribe case also demonstrates the potential consequences of unauthorized employees becoming involved in transactions outside their official responsibilities. Lam had no authority to process commercial credit facilities or letters of credit, yet he was allegedly positioned by the syndicate as a bank contact for the transactions.

An additional conspiracy charge relating to the use of false instruments remained on the court file but was not proceeded with against Lam, according to the supplied report.

Crypto bribe investigation continues beyond Lam

Lam’s four-year sentence does not mark the end of the investigation. The ICAC said it had applied for arrest warrants for other individuals implicated in the scheme.

The crypto bribe investigation underscores the intersection between digital-asset payments, financial institutions and traditional document fraud. While the cryptocurrency itself was Tether, the alleged scheme ultimately targeted conventional banking instruments used to support insurance-related investment transactions.

The case also illustrates the importance of verifying financial guarantees directly with issuing institutions. The false letters purported to carry the backing of CCB, but the bank’s internal investigation established that the documents had never been authorized or issued by CCB or its affiliated entities.

For Hong Kong’s financial sector, the crypto bribe case has therefore extended beyond the value of the cryptocurrency allegedly received. The court considered the broader implications of forged banking documents, including potential economic and reputational consequences for the institutions involved.

The ICAC’s investigation remains focused on identifying other participants, while Lam begins his four-year prison sentence after admitting his role in the scheme. The crypto bribe involved more than US$470,000 in Tether, while the fraudulent instruments he authenticated were valued at more than US$1.6 billion.