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Hong Kong authorities have launched the CryptoTrace tool, an innovative development in the fight against crypto-related crime. Created by the Cyber Security and Technology Crime Bureau (CSTCB) in collaboration with the University of Hong Kong, the CryptoTrace tool empowers law enforcement with advanced capabilities to trace and analyze suspicious virtual asset transactions.
The announcement comes amid rising threats in the Web3 space and a surge in blockchain-related fraud targeting Hong Kong residents and investors.
According to the official statement, the CryptoTrace tool provides “advanced intelligence and investigation support to crime investigation units,” helping authorities track virtual asset flows with greater accuracy.
In March 2025, CSTCB conducted multiple training sessions for frontline officers using the CryptoTrace tool. The objective was to enhance the technical capabilities of local police in handling crypto-related cases—everything from wallet tracing to blockchain forensics.
“We are committed to building a secure, resilient and responsible virtual asset ecosystem,” said Chief Superintendent Lam Cheuk-ho of the CSTCB.
“Tools like CryptoTrace tool are vital in bridging the knowledge gap between law enforcement and evolving digital threats.”
The CryptoTrace tool is not operating in isolation. As part of a larger initiative, CSTCB is engaging with key players across the digital economy, including exchanges, fintech regulators, and blockchain security firms.
At the Cyberport Blockchain Security Conference 2025, Chief Superintendent Lam emphasized the shared responsibility among law enforcement, exchanges, and regulators.
“Exchanges must tighten compliance. Law enforcement must innovate. Regulators must be proactive,” he stated.
“The CryptoTrace tool acts as a unifying force across this chain.”
The urgency behind the development of the CryptoTrace tool is rooted in hard numbers. According to legal firm Titus, Hong Kong lost over $3.1 billion to crypto-related scams in the first 10 months of 2024 alone.
In one case, authorities shut down a massive HK$360 million ($46.35 million) cryptocurrency investment scheme that had lured in hundreds of investors with false promises.
In another, officials exposed a sophisticated scam promoting a fake “National Hong Kong Coin,” misleading citizens into thinking the government was launching an official digital currency.
These cases highlight the pressing need for tools like the CryptoTrace’ tool to investigate wallet activity and shut down scam networks quickly.
At the Blockchain Compliance Professionals Association summit earlier this year, CSTCB’s Chief Inspector Yan Ngan Hoi-yan emphasized how the CryptoTrace tool plays a critical role in anti-money laundering investigations.
The CryptoTrace’ tool enables a multi-layered analysis of illicit crypto activity, providing officers with visual and analytical tools to connect addresses, identify on-chain behaviors, and flag suspicious patterns.
This helps detect and prevent money laundering schemes that often fly under the radar of traditional policing tools.
“Web3 cannot thrive without trust,” said Yan. “The CryptoTrace tool gives us the power to pursue wrongdoers with precision and speed.”
The CryptoTrace’ tool is also a testament to the successful collaboration between academia and public institutions. The University of Hong Kong worked hand-in-hand with the CSTCB to fine-tune the system’s blockchain analysis models and machine learning capabilities.
This partnership ensured the CryptoTrace tool is not only technically robust but also grounded in practical application for criminal investigations.
Despite the rising scams, Hong Kong continues to hold its reputation as one of the world’s most crypto-friendly cities, ranked second globally by the 2025 Crypto Report published by migration platform Multipolitan.
The launch of the CryptoTrace tool helps reinforce that status by signaling to investors, builders, and regulators that Hong Kong is serious about digital security.
Hong Kong’s CSTCB is enhancing its CryptoTrace tool to track cross-border crypto flows—a key tactic in global scams. Plans include integration with international blockchain intelligence networks for seamless case collaboration.
The bureau also aims to forge public-private partnerships, sharing threat data to help exchanges and startups strengthen compliance. More than just policing tech, CryptoTrace signals Hong Kong’s push for innovative law enforcement in Web3.
With fraud evolving, this tool could be pivotal in rebuilding trust—and safeguarding billions—in the crypto ecosystem.
The Bit Gazette will continue to observe the market and report as events unfold.
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