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Crypto and other investment scams, and how to avoid them

4 minute read

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Financial scams are as old as money itself, and the internet has created even more opportunities for criminals to try to con people out of their money. Most recently, the growth of Bitcoin and other digital cryptocurrencies as an investment vehicle has seen a corresponding rise in investment scams targeting crypto investors.

Let’s take a look at the most common investments scams so you can better protect your investments.

The rise and risks of cryptocurrency investing

An increasing number of investors have added cryptocurrencies (digital currencies) such as Bitcoin to their portfolios, often drawn in by recent extensive media coverage and discussion within the investing community about the potential for high returns.

The BC Securities Commission (BCSC) considers cryptocurrencies and crypto assets as speculative, and therefore high-risk, and only regulates crypto assets. Like many Canadian securities regulators, they also urge investors to be cautious when using trading platforms, many of which are unregulated.

Examples of crypto assets are:

  • Utility tokens
  • Security tokens
  • Non-fungible tokens (NFTs)

Criminals have taken notice of the rise in cryptocurrency investing in Canada and around the world, and how vulnerable seniors in particular can be to investment scams and schemes. In 2022, the Canadian Anti-Fraud Centre (CAFC) reported that investment scams were the highest reported scams based on dollar loss, with a total loss of $163.9M reported by Canadians.

Most reports involved Canadians falling prey to common cryptocurrency scams, with investors over 60 years of age the most likely to fall prey to investment scams.

Common cryptocurrency scams

Knowing how to recognize potential investment scams is often half the battle. Because Bitcoin and other cryptocurrencies are typically traded through unregulated online exchanges and exist in digital form only, cryptocurrency investors are particularly exposed to online scams.

Two common ways criminals try to con people out of their funds are:

Romance scams Social media scams
One variation of this scam is when a victim is approached on an online dating site or app and invited to invest in a cryptocurrency “opportunity.” The criminal tries to gain the victim’s trust, with the aim of getting them to transfer money to their cryptocurrency wallet. When they have the money, they disappear. A victim responds to an advertisement they see on social media offering high returns or the opportunity to make large amounts of money in a short time period using cryptocurrency. Often these advertisements appear to be falsely or fraudulently endorsed by celebrities.


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How to protect yourself and identify red flags

Recognizing the warning signs is just the first step. It can be hard when you’re put on the spot by someone in person, in an email exchange, or on a call. No-one likes to appear rude. However, it’s vital to know what to do when you spot some of the warning signs above, and be willing to do it.

Here are a few ways to avoid some of the most common risky situations designed to defraud you:

  • Hang up if you receive a suspicious offer by phone
  • Don’t reply to emails containing offers that are too good to be true
  • Don’t give out personal or financial information to anyone
  • Don’t rely on unqualified people, including friends and family, for investment advice
  • Slow down. If there’s a sense of urgency take the time to investigate the investment thoroughly.

Avoiding losing your life savings really can be as simple as saying “No.”

For more general fraud prevention information, including staying safe online and creating stronger passwords, check out our Prevent Fraud series of articles.

How to report suspected scams

If you think you have been targeted by a scam or have been the victim of a scam, you should report it to both your local police and the CAFC. Use the CAFC’s online reporting system or call them at 1-888-495-8501. Even if you just suspect you have been targeted but haven’t lost any money, please report it to help track current scams.

What else can you do? Remember, security is everyone’s responsibility. Consider calling your friends and sharing this article with them. Encourage them to tell their friends. Awareness of the dangers is the best defence against cryptocurrency and other investment scams. If you get that “trust me” call or email about the next great investment “opportunity,” you know what to do—and what not to do.

Stay informed

Stay up-to-date with the latest cryptocurrency and other investment scams, and get more tips on avoiding fraud, with these trusted resources: