British Columbians should be wary of cyber crooks using social media and online dating sites to lure B.C. residents into crypto-asset scams.
In 2021's first eight months, British Columbians reported $3.5 million in losses from crypto-investment scams — more than triple 2020 losses, the Canadian Anti-Fraud Centre (CAFC) reported.
And, said CAFC, there's been a 5,600% increase in fraud to a total of $28.5 million involving cryptocurrency in Canada since 2015.
On average, only five per cent of fraud victims report such incidents to authorities.
"Fraudsters use social media and dating apps to manipulate people looking to make meaningful connections, exploit their victim's trust, and then defraud them of significant amounts of money," B.C. Securities Commission director of enforcement Doug Muir said.
"Be extremely wary if you are contacted out of the blue or promised high returns that sound too good to be true," Muir said. "Always research the investment and the person selling it before you invest."
The commission, police and the CAFC said fraudsters could run the scams in several ways.
Romance and relationship scams
Scammers may develop online relationships with people and then present an investment opportunity, convincing them to make an initial payment and then continuing to pressure them with sometimes significant losses.
In other cases, crooks will identify a target's friend and pose as that friend to encourage investment in the scam.
And, scammers research potential victims online, including reviewing their social media posts, to create a tailored strategy to maximize the chances of success of stealing from them.
Tech support and crypto scams
Sometimes, a fraudster can convince their target to provide remote access to their computer.
The suspect shows the person a fraudulent crypto-investing website that promises substantial returns. In many cases, people will continue investing until it becomes clear that their funds cannot be withdrawn.
In some cases, fraudsters may claim to use an investor's money to buy digital currencies and then cut off all communication after receiving the funds.
RCMP Supt. Brent Taylor of the federal RCMP Financial Integrity Program in B.C. said growth in the scams is not unnoticed.
"Police enforcement cannot stop this activity without the assistance of the public. Better educating yourself using legitimate sources before investing is key," Taylor said. "Doing your homework can go a long way toward protecting your money and investments."
Derek Manky, chief of security insights and global threat alliance for Fortinet, a California-based company with operations in Burnaby, said the surge in cryptocurrency use corresponds to cyber crooks targeting its use, too.
"These days, almost all ransomware attackers demand payments via some form of cryptocurrency — this also extends to fraudsters and cybercriminals in general, too," Manky said.
He said cryptocurrency scams make it a lot harder to identify who the actual person behind the keyboard is and it doesn't leave easily followed paper trails. "Bad actors are also undoubtedly able to leverage fear, uncertainty and doubt when it comes to cryptocurrency, too. It's such a comparatively new technology that many people still don't fully understand it."
He said such crooks could expand their portfolios to receive funds into their crypto network, including money-laundering networks. "For bad actors, this kind of convenience is a no-brainer," Manky said.
What precautions can I take to protect myself from crypto-asset scams?
Police, the commission and the CAFC suggested precautions people could take. They include:
• Buying crypto-assets through a registered trading platform. Check the Canadian Securities Administrators' National Registration Search to see if an entity is registered with securities regulators;
• Being extremely cautious about unsolicited offers to invest through social media or dating sites;
• Never sending money or investing based solely on the advice of someone they met through social media or a dating site;
• Being skeptical of guaranteed high returns with little or no risk: Generally, the higher the return, the higher the risk;
• Resisting the pressure to buy. Fraudsters can have you signed up before you even know it. If you ever feel you're being rushed, remember, it's OK to say no or ask for more time;
• Ignoring the fear of missing out. Fraudsters are skilled at making it sound like their offer is making others rich while you are not, and;
• Asking questions. Fraudsters work hard to override people's instincts with complex documents and use overcomplicated, inconsistent, jargon-filled explanations. If you can't understand it and can't get your questions answered, walk away.