A story about fraud, failure, and flight from Cambodia.
Who is CryptoAsia?
CryptoAsia is a self-funded cryptocurrency startup based in Phnom Penh. Launched in early 2017, we aimed to transform our many years of experience in Bitcoin exchange services into a formal business entity.
Our mission was to introduce Cambodia to the ideals embodied by cryptocurrency: financial sovereignty, decentralization, privacy & more. We would achieve this by introducing a Bitcoin payment solution for Cambodian merchants. We wanted to increase adoption of Bitcoin and prove its importance as a payment method.
Unfortunately, the Bitcoin ecosystem changed course in 2017. Digital currencies became the tool of opportunists, scammers, phony “investors” and “traders,” ponzi schemers and charlatans. The influx of new users sent transaction fees skyrocketing and the Bitcoin network couldn’t adapt. Bitcoin became impractical as an everyday payment method.
Our merchant Bitcoin payment gateway for Cambodia had to be shelved, so we refocused our efforts on the Bitcoin exchange business. In spite of repeated failure to launch an online exchange platform, our peer-to-peer trades kept us profitable.
Perhaps nowhere was the shift in Bitcoin’s user base felt more strongly than in Cambodia. Being the most visible exchange service in Cambodia gave us a unique perspective on exactly how toxic the Bitcoin world had become. We were met with a relentless parade of traders and schemers who couldn’t care less about the virtues of Bitcoin. It taxed our soul, but we kept trying.
It was only a matter of time before we were burned.
It’s all over
On July 25th, 2019, one of our customers scammed a 3rd party. This 3rd party was completely unknown to us at the time, but they had regularly worked with this scammer in a business entirely unrelated to ours.
Executing what’s called a man-in-the-middle scam, the scammer (our former customer) allegedly defrauded the victim out of $10,000. As a result, the victim sued us. We did nothing wrong, but we were targeted by the victim as retribution.
For our tiny, completely self-funded startup, $10,000 was enough to destroy more than our business. Although we were profitable, we have many dependents and expenses. Our profits are reinvested in our several businesses, making us illiquid.
As a result, everything we’ve done in Cambodia has been destroyed. Our business is shuttered and our revenue stream is finished. The livelihoods of our family and the families of those we employ have been affected as well. The sadness and frustration we’ve experienced cannot be understated.
What is a man in the middle scam?
A man in the middle scam is a popular scam where 2 parties are unknowingly set against each other by a scammer. The scammer uses the identity of one party to defraud the other party.
For example, the scammer requests to buy goods or services from party 1 and asks him for his payment details (ie, a bank account number or PayPal address). At the same time, the scammer begins a conversation with party 2 to sell those same goods, and gives him the payment details from party 1. Party 2 remits payment to party 1, and party 1 sends the goods to the scammer assuming that he is the one who made the payment.
When party 2 realizes he has been defrauded, a dispute arises between the parties, and the scammer escapes. The scam neatly sets the 2 parties against each other while the scammer avoids retribution.
Our case is a bit unique, however, given that the scammer is not anonymous. He is known personally to both parties and has dealt with them repeatedly. He is, in fact, a criminal who still resides in Phnom Penh.
Why did the victims sue us when the scammer’s identity and location were known?
They did not file a police report against the scammer. They instead chose to bring a legal suit against us, accusing us of scamming them.
Why would they sue us? The answer is extortion. They threatened to bring us to Cambodian court unless we agreed to pay them.
With a case like this, even though the evidence overwhelmingly supports us, there are no guarantees. Lawyers are expensive. And even if we win, they can still appeal, and the procedure could take years to resolve. Additionally, Bitcoin-related legal cases are completely new to Cambodian court. In short, the justice system cannot be trusted.
On July 24th, 2019, the scammer contacted us to purchase Bitcoin. The sale was executed the following day, on July 25th.
The cardinal rule when buying or selling anything online is to NEVER SEND FIRST. This is business sense, it is common sense, and it is the gospel when dealing with Bitcoin. Keep that in mind as you read our chat logs with the scammer, provided here:
The scammer began a conversation with us to buy Bitcoin. At the same time, he was engaged in a conversation with the other party to sell Bitcoin. They had transacted many times in the past, in values many times greater than the transaction at hand.
Note from the chat logs above how eagerly Abdul presses us to send the Bitcoin without being paid first. This is something only a fool would agree to do. As it turns out, a group of fools agreed to do it. And those fools sued us for fraud.
Bank transfer disputes
We sent the Bitcoin as agreed once we received the payment. Shortly thereafter, the $10k bank transfer was disputed. You can see $10,000 appears as pending on our account.
The bank will allow customers to dispute a transaction with a valid reason. The justification given by the sender was that he accidentally sent the money to the wrong account. This was a deliberate lie. The payment was made exactly as intended. We will provide proof of this later.
Once we discovered the payment was disputed, we immediately went to ABA Bank to find out why. They explained to us that the sender claimed they mistakenly sent the money to the wrong account. We replied that it was indeed intended for us. They explained that if the 2 parties involved cannot come to an agreement then the payment can only be released by a court order.
The man himself is named Abdul: family name US’SUTTERI, given name ABDURRAHMAN. He is currently in Cambodian prison for possession of guns. The entire scam was run from inside the jail, where he was able to get hold of a smart phone. His incarceration was unknown to us at the time of the transaction. Read about his crimes here, here, here, and here.
Never send first
A man-in-the-middle scam causes a dispute to arise between two parties. The scammer cannot use his own bank account and expect to succeed. He must find a party willing to send the money first.
As you can see from our chat logs, we were adamant to receive payment first before sending the Bitcoin. If the counter-party had not trusted the scammer, the transaction would not have happened.
As a consequence of our foresight we avoided being scammed. Yet we were victimized by those who refuse responsibility for their mistakes. Were they innocent victims who got fooled into making this trade? Were they inexperienced and exploitable? Nothing could be further from the truth.
We made 3 successful transactions over a year with Abdul before he was arrested and had no problems. This was also the case for the party who sued us. They felt comfortable trading with him in much larger amounts, more frequently, and even trusting him to hold their money.
Who were these people who entrusted a scammer with $10,000?
The counter-party to the transaction were a group of Bitcoin “investment brokers.” They solicited funds from Cambodian citizens, charging them a fee to purchase risky cryptocurrency assets. The marketing of cryptocurrencies as an investment is explicitly illegal in Cambodia. But they do it anyway.
The point-man for this illegal consortium is named Chhay Rithy Sak. He is directed by 2 wealthy businessmen who provide liquidity from Cambodian investors. The names of these businessmen are Punlok & Tekket. We will discuss these gentlemen later.
First, have a look at Chhay’s public Facebook profile:
In his Facebook intro Chhay declares he is a trader, “Buy and Sell Bitcoin.”
Let’s review some correspondence between Chhay and the scammer. The following chat logs were provided to us by Chhay. They include the details of more than one successful prior trade between these two parties.
To be clear, these chat logs document multiple prior trades between the scammer and Chhay. We were not able to obtain chat logs for the trade in question. There are 8 consecutive screenshots of their chat logs, presented here:
“Bitcoin Saler” is Abdul. He provides his identifying information at timestamp 01/04/2019, 09:24. & 19/05/2019, 16:30.
“CambodiaBTC27” is Chhay. He provides his identifying information at timestamp 24/02/2019, 21:41.
Both parties used their own personal bank accounts. We can see from the logs that Chhay trusted the scammer and REGULARLY agreed to pay Abdul first:
19/05/2019, 16:11 – CambodiaBTC27: Ok I ask my partner first can he sent money to me first or not
19/05/2019, 16:11 – Bitcoin Saler: Ok
19/05/2019, 16:11 – Bitcoin Saler: Check and let me know
19/05/2019, 16:11 – CambodiaBTC27: Ok
19/05/2019, 16:29 – CambodiaBTC27: Hello
19/05/2019, 16:30 – CambodiaBTC27: I will sent money soon
19/05/2019, 16:30 – Bitcoin Saler: Ok
19/05/2019, 16:30 – Bitcoin Saler: Let me know
19/05/2019, 16:30 – CambodiaBTC27: 000562647 ABDURRAHMAN USSUTTERI
19/05/2019, 16:31 – Bitcoin Saler: <Media omitted>
19/05/2019, 16:31 – CambodiaBTC27: 👌
19/05/2019, 17:12 – CambodiaBTC27: Hello I sent money now
The bank account number used in this trade was the same account used to send money to us. The Facebook page and the chat logs make it clear that Chhay was fully aware of what he was doing. His partners were aware of the risks that they were taking as well, as Chhay had to ask them to fund the trade in advance of receiving Bitcoin.
For a man in the middle scam to work, the victim must trust the scammer. Since Chhay and his partners had made several successful trades with the scammer, a level of trust had been established, making them a perfect target.
A “legal threat” is a statement by one party that it intends to take legal action on another party unless they get paid. This is a form of extortion. We were extorted by Chhay and his partners. They threatened to sue us and served us a court order. What were they suing us for? Fraud.
Yes, in spite of knowing full well the exact details of what we have already described, the scam victims (Chhay and his partners) accused us of defrauding them.
The details of the extortion presented to us were explained by Chhay and his group, in their own words, at our first meeting together.
Post-scam meeting #1
On the evening of July 25th, 2019, the parties met to discuss the events of the day. The meeting was arranged by Alex Sopheak, a mutual acquaintance of both parties and a major Bitcoin exchanger in Phnom Penh. He attended the meeting along with Punlok. Tekket did not come to the meeting and sent his wife instead.
Scam details are discussed in Khmer here:
Here, in English, we learn that Chhay lied to the bank:
Here, we learn that Chhay needs to discuss more with Punlok and Tekket their plan to extort us:
And here they threaten to go to the police to attack us. The English portion begins around 6:50:
They refused to report the crime or the criminal to the police. However, as part of their extortion, they threatened to go to the police to report US for scamming THEM.
Chhay came alone the next day to meet with us. Less than 24 hours after he was scammed he demanded that we give him $5000 or else he would bring a lawsuit against us. The meeting was arranged under the pretense of negotiation. But it was clear we were being threatened.
Chhay then met us a 3rd time. He subsequently served us court documents claiming that we had scammed him.
Naturally, we consulted with (and paid) lawyers to help us navigate the situation. What was their advice? Acquiesce to the extortion.
We had no one to support us.
We know Chhay was taking orders from his superiors, Punlok and Tekket. Let’s have a look at these characters in more detail.
Bitcoin investment broker, Punlok
The following screencaps were retrieved from the public Facebook profile of Crypto Punlok
The entire Facebook profile of Punlok is an embarrassing riches of everything that is wrong with the modern Bitcoin ecosystem. False promises of riches, phony investment schemes, and outright lies decorate every one of his posts. He is attempting to rope in vulnerable Khmers to prey off of their greed.
Writing “Works at Blockchain,” “Trader at CryptoCurrency,” “Consultant at Digital MONEY” on a public profile would be shameful for a respectable person. But not for a self-aggrandizing piece of dogshit like Punlok. We wonder how many poor Khmers were duped into his ponzi schemes. Have a look at his Facebook page for a good laugh.
Bitcoin investment broker, Tekket
The following screencaps were retrieved from the public Facebook profile of Tek Ket.
Unsurprisingly, Tekket is another phony Bitcoin expert peddling scam investment advice to innocent Khmers. A “Network Marketing God Father” and ForEx trader? These people have no shame. They don’t care who they hurt so long as they can win $1. They are criminals who deserved to be scammed.
With friends like these, Alex Sopheak
Chhay, Punlok, and Tekket used the threat of a lawsuit against us for the purpose of extortion. Interestingly, they were able to gain the support of Alex Sopheak, a tuktuk driver turned prominent Bitcoin exchanger in Phnom Penh.
Alex was someone we dealt with regularly and had a good working relationship. He presented himself as a neutral party to the fraud and acted as if he supported us. But, as time went on, it became clear that he was a hypocrite, serving the interests of Punlok and Tekket, and possibly sharing in their spoils.
Why would anyone support extortion? Alex was a competitor to our business. More importantly, he knew the Bitcoin ecosystem in Cambodia would have been rattled if the truth were exposed. There are many cryptocurrency investment frauds in Cambodia, and they all depend on Alex.
Click the images for full-sized screencaps of our chat logs with Alex. This is someone whose support we would have expected at the time.
We did our best to deliver a comprehensive account of the events. Yet we have left a lot of information out for the sake of brevity and continuity. Presenting it all is tedious and time-consuming, with language translations adding to the difficulty.
For us, this experience was a heartbreaking conclusion to 6 years of effort promoting Bitcoin in Cambodia. We had a few successes and we met a lot of great people. In the end, we simply were not up to the challenge.
We failed in Cambodia. Tired, heartbroken, and saddled with debt, we turn our eyes away from the country we loved.
Thank you to our customers, and thank you for reading!
10/10/2019 UPDATE #1: They’ve destroyed our business. They’ve destroyed our lives. We are in debt and we have left Cambodia. But that is not enough for them. They have reported this very article to the police. But they still have not reported the criminal who stole $10,000 from them.