Over the past several years, there has been a lot of hype over investing in cryptocurrency as a new, tech-driven money-making opportunity. According to the Bank of Canada, the share of Canadians owning Bitcoin rose from 5 percent in 2018 – 2020 to 13 percent in 2021, an incredible jump in the number of people and businesses hoping to take advantage of crypto’s decentralized nature to make a profit on their investment.
With hundreds of billions of dollars currently invested in crypto, it’s little wonder that tech-savvy scammers have entered the scene to bilk innocent people of their hard-earned money. In 2022, Canadians were conned out of over $308 million through crypto scams. Worse yet, it’s estimated that less than 5 percent of crypto fraud cases are reported; clearly, the vast majority of victims feel embarrassed about telling their families or the police about their losses.
Cryptocurrency isn’t going anywhere soon, so it’s prudent to learn ways to identify potential scams and avoid becoming victimized.
How to protect yourself from crypto scams
No one is safe from crypto scams, even if you’re currently an investor. However, you can protect yourself by following the tips below if you ever receive contact from a potential con artist:
Be wary of the offer
As much as you might want to believe the “pitch” of a healthy or guaranteed return on investment, there’s good reason to be skeptical. No investments are guaranteed, so avoid the temptation to take the person at their word.
Research the seller
There are many crypto trading platforms available online. Research the people and company you’re considering investing with, and stick with trusted entities that have a visible public footprint and a solid online and offline reputation. You can also check with AreTheyRegistered.ca before making any decisions.
Don’t succumb to pressure
The seller might exert pressure on you to take advantage of their “time-sensitive” offer or purchase “before the deadline”. It’s well worth the effort to research the opportunity and talk to a registered investment professional before making a decision.
Look past the technical jargon
Many fast-talking scammers will use confusing technical jargon to explain topics such as blockchain. Their goal is to create an air of authority and knowledge in an attempt to build trust. Never purchase anything without fully understanding what you’re getting into.
Only communicate through officially verified means
Legitimate investment companies don’t prospect for new clients through social media channels, pop-up ads, or community chat apps. Don’t respond to unsolicited communications that come through these channels.
Be careful with email messaging
If you receive a message through email, a common avenue for scammers, review the sender’s email address closely to ensure the domain matches that of the company’s website. Research the seller and avoid clicking any links in the email until you’re sure it’s safe.
Be cautious with new online “relationships”
Scammers try to gain the trust of potential victims by starting as new “friends” on social media or potential partners on dating websites. If your budding romance turns into an “investment opportunity”, something malicious could be going on behind the scenes. Proceed with extreme caution.
Protect your personal information
Avoid sharing your passwords, private keys, or seed phrases with anyone.
Don’t transfer crypto to unknown wallets
If you send crypto to a wallet other than your own, be sure you know and trust the person or company it belongs to. If you can’t verify the wallet’s ownership, don’t send them anything.
Never respond to blackmail
Many scammers will prey on cybersecurity fears by claiming to have information about your browsing history, passwords, or embarrassing webcam recording and then try to blackmail you into sending them crypto to prevent the information from being sent to your contact list. This can be a frightening situation, but the best approach is to ignore these types of scams altogether.
What to do if you’re a victim of crypto fraud or a scam
Realizing that a crypto con artist may have swindled you can trigger many emotions, including shame, anger, shock, and helplessness. Many victims begin to experience mental health issues as a result of being scammed.
However, it’s best to keep calm and report the incident to your local police and the Canadian Anti-Fraud Centre (CAFC) through their online portal or by phone at 1-888-495-8501 immediately.
The CAFC is Canada’s central repository for information about all types of fraud. It’s jointly managed by the Royal Canadian Mounted Police, the Competition Bureau Canada, and the Ontario Provincial Police. They can launch an investigation into your case and get a better sense of how crypto con artists operate in Canada.
If you have any questions about cryptocurrency scams or would like to consult through legal tools to help recover funds lost through fraud, call Shnier Mackenzie Law & Policy Consulting, PC right away at 416-781-0800 for your free consultation.