Crypto and Romance Fraud Warning

OTTAWA, ON, May 28, 2024 /PRNewswire/ — The Canadian Anti-Fraud Center (CAFC) and the Canadian Investment Regulatory Organization (CIRO) are raising awareness among Canadians of the growing threat of sophisticated scams, particularly those involving extensive online communications. These scams often culminate in convincing individuals to invest in various schemes, often involving cryptocurrencies.

Logo of the Canadian Investment Regulatory Organization (CIRO) (CNW Group/Canadian Investment Regulatory Organization (CIRO))

These elaborate scams use social manipulation and financial baiting tactics to exploit public interest and incomplete understanding of crypto assets. Victims are tricked into transferring increasing amounts of money.

Typical investment frauds offer “get rich quick” opportunities and promise higher-than-normal returns. Unfortunately, these frauds often lead to investors losing most, or all, of their money.

The CAFC is also noticing an increase romance/investment scamsa method colloquially known as “pig slaughter“. Victims are contacted on apps/websites or social media by scammers who attempt to develop a relationship to gain trust. The scammer then claims to have been successful in cryptocurrency investments and offers to help the victim “get rich”. Scammers use fake online trading platforms and convince victims to transfer funds or cryptocurrency to their trading account, often resulting in the victim being unable to withdraw their funds.

Scammers may attempt to befriend the victim, develop an online romance, or pose as legitimate investment advisors. Over time, the scammer will suggest investing in an opportunity, often involving crypto assets, and once you have sent a significant amount of money or cryptocurrency, the scammer abruptly cuts off contact.

In some cases, when victims request their money back, the scammer agrees but requests additional funds for supposed taxes and fees before disappearing. Victims may also be approached by new entities offering to help them recover their funds for a fee, which represents yet another level of fraud.

Watch out for these warning signs:

• Unsolicited messages from strangers on social media, dating apps/websites, and text messages leading to prolonged exchanges, often directed to private messaging apps.

• Mention of easy money earned in the cryptocurrency market, often based on exclusive information or through “professional traders”.

• Encouragement to visit cryptocurrency-related websites, which may appear legitimate and use terms such as “investment packages” and “guaranteed rates of return.”

• Providing financial documents showing returns or allowing a small withdrawal to create a false sense of legitimacy.

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How Canadians can protect themselves:

• Be wary of unsolicited messages on social media or “wrong number” messages, especially if the sender is trying to develop a connection.

• Avoid investing based solely on the advice of someone you meet online. Consult registered financial professionals if necessary.

• Pay attention if an online connection suggests investing in cryptocurrencies or transferring funds to specific platforms.

• Be skeptical of promises of large, quick, low-risk returns.

• Report suspected investment fraud to CIRO, CAFC and local police.

• Stay informed and be careful to avoid falling victim to investment fraud and romance scams. Visit the CAFC AND CIRO the websites regularly receive additional tips and information.

If you believe you have been a victim of this or a similar scam, contact your bank, local police, your provincial or territorial securities commissionand the CAFC.

Facts in brief

• Losses due to investment fraud totaled $309.4 million in 2023, representing the highest losses reported to the CAFC in 2023.

• Overall social media losses reported to the CAFC in 2023 are $172 million.

• Perpetrators of romance/investment scams are often part of criminal gangs that operate outside of Canada and have caused significant individual losses, sometimes exceeding $1 million.

• THE CAFC is Canada’s central repository of fraud data, intelligence and resources.

• The CAFC provides timely, accurate and useful information to assist citizens, businesses, law enforcement and government agencies.

• CIRO is the national self-regulatory organization that oversees all investment dealers, mutual fund dealers and trading activity in the Canadian stock and bond markets.

• CIRO is committed to protecting investors by providing efficient and consistent regulation and strengthening Canadians’ trust in financial regulation and the people who manage their investments.

• The CIRO Investors Office publishes information to help investors keep their investments safe, available at Avoid fraud and protect your investments.

Associated links

SOURCE Canadian Investment Regulatory Organization (CIRO)

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