Fun Coffee rip-off: Why specialists say tech instruments are key to combating Ponzi schemes

The Fun Coffee cryptocurrency funding rip-off has highlighted the rising ingenuity of Ponzi schemes within the period of synthetic intelligence, with specialists calling for early detection of suspicious blockchain wallets utilizing tech instruments and cross-jurisdiction information sharing between police and crypto exchanges to struggle such fraud.

A monetary fraud, touting funding in Fun Coffee, has dominated Hong Kong and Macao headlines for days, involving greater than HK$100 million ($13 million) and over 260 studies within the two cities to this point.

A textbook Ponzi scheme

The firm, portraying itself as a espresso funding agency based mostly on Vietnam’s Phu Quoc Island with substantial capital and plans for a public itemizing, entered the Hong Kong market in late 2025. It promoted investments in espresso associated ventures by cryptocurrency, claiming to have developed superior gear and expertise – with returns of as much as 278 %, and better income for bigger investments and longer deposit intervals.

Victims had been invited to obtain the Fun Coffee app earlier than investing utilizing digital forex. The scheme supplied referral bonuses for recruiting contacts and rewards for each day log‑ins, successfully trapping traders in a cycle of repeat contributions.

On July 20, the app abruptly went offline, leaving traders stranded and prompting them to name police. Investigations revealed that Fun Coffee was a fraud that generated no actual income, merely paying early traders with funds from newer recruits — a textbook Ponzi scheme described by many specialists.

Since July, the investigation has recorded over 260 claims — not less than 255 in Hong Kong and 9 in Macao — with estimated losses of over HK$100 million and MOP 3.6 million ($446,000). Individual losses ranged from a whole bunch of 1000’s to tens of tens of millions of Hong Kong {dollars}, with the most important single loss reaching HK$50 million.

Hong Kong police arrested six suspects on conspiracy to defraud prices, together with firm administrators, a shareholder, a secretary and key promoters, whereas Macao police detained two suspects for aggravated fraud. Hong Kong’s Securities and Futures Commission additionally flagged the Fun Coffee GCM Project as a suspicious funding product.

ALSO READ: HK, Macao police detain eight over HK$94m ‘Fun Coffee’ crypto fraud

Glitzy “chicken sheds”

During an interview with China Daily, Hui Kai lung, chair professor of knowledge techniques, enterprise statistics, and operations administration at Hong Kong University of Science and Technology, stated Ponzi schemes, although not new, have grown extra misleading with advances in expertise, particularly fin-tech and AI.

Ordinary individuals, who’re normally unfamiliar with the funding fashions and logic behind new monetary merchandise like digital property, discover it tough to identify such frauds. Meanwhile, expertise makes it simpler to assemble subtle traps — what in Cantonese slang is known as “building a chicken shed” to lure in victims.

“Creating a convincing website, hosting a polished offline event, and using digital tools to maintain long‑term communication with investors – it’s far cheaper now, especially with AI,” he stated.

He added that in prosperous economies it’s pure for individuals to hunt funding channels as soon as they’ve amassed wealth. Hong Kong, as a monetary hub, promotes wealth creation, and even regulated banks and funding establishments usually pitch excessive returns.

“People are not necessarily greedy,” he stated.

He added that probably the most direct protection is for traders to sharpen their judgment — to see by the glitzy “chicken sheds” and concentrate on the basics of investing, together with whether or not a challenge can actually generate high-value returns.

Many of Fun Coffee’s actions, akin to marathons and abroad occasions, or the reward giving that’s widespread throughout Ponzi schemes, did little to spice up funding returns, serving solely to create an phantasm that the corporate was authentic.

READ MORE: Hundreds lured into HK$100m ‘Fun Coffee’ rip-off in HK, Macao

Tech earlier than the rip-off

Technology complicates scams, but additionally presents the best instruments to struggle them, specialists say.

Francis Fong Po-kiu, honorary president of the Hong Kong Information Technology Federation, advised China Daily that because the Fun Coffee rip-off blended offline multi degree advertising with transfers utilizing cryptocurrencies, akin to USDT, the primary problem was the disconnect between offline exercise and on-chain information. Victims usually purchased USDT by money exchanges or centralized platforms and despatched it to numerous personal wallets. The rip-off app solely confirmed faux off-chain balances, whereas really, funds had been instantly laundered by decentralized exchanges. Because of this it turned tough to hyperlink the scattered crypto transactions to a single rip-off syndicate, Fong stated.

As seen within the Fun Coffee case, victims usually stay unaware till their funds are practically depleted. To deal with this, Fong proposes an early warning system that makes use of AI to watch blockchain wallets for indicators of Ponzi like exercise.

These wallets usually present a excessive quantity of small incoming transfers from many new accounts with nearly no outgoing funds, he stated.

Once flagged, these addresses could possibly be pushed to safety platforms like Hong Kong’s Scameter, alerting customers earlier than they full a switch.

Blockchain, not like conventional banking, makes each transaction clear. Fong additionally instructed customers verify pockets addresses on public block explorers like Etherscan or Tronscan. “A wallet that endlessly absorbs funds and immediately sweeps them out is a major red flag,” he stated. He additional referred to as for integrating public fraud databases immediately into crypto wallets and messaging apps, which might robotically block transfers to recognized rip-off addresses earlier than funds are misplaced.

Fong stated the cross border nature of cryptocurrencies means funds usually circulate throughout a number of jurisdictions – on this case, probably Vietnam, Singapore, Hong Kong and Macao. This complicates enforcement, Fong added, “as crypto moves instantly, but cross border law enforcement is slow”.

Intelligence databases differ throughout jurisdictions, and official asset freezing requests usually require months of authorized paperwork. To deal with this, he urged the creation of a shared worldwide utility programming interface community, which might allow communication between completely different software program techniques of police forces and crypto exchanges throughout jurisdictions, aiding with real-time monitoring and emergency asset freezing.

Lawmaker and tech entrepreneur Johnny Ng Kit-chong, throughout a media briefing held with a number of victims on Wednesday, stated his workforce has helped victims accumulate information and hint digital property within the hope of figuring out the masterminds behind the scheme.

He urged authorities to enhance mechanisms, permitting regulators to freeze each associated property and cryptocurrencies concurrently upon detecting suspicious transactions. He additionally referred to as for cooperation between regulation enforcement within the Macao SAR, Singapore and different jurisdictions to catch the culprits, including that the actual variety of victims may surpass 1,000.

Contact the author at amberwu@chinadailyhk.com