Phone and email-based fraud has long been an issue in Canada, with targets commonly being duped into sending cash or even gift cards to fraudsters, usually online. However, scams are now moving into the cryptocurrency realm, with cryptocurrency ATMs publicly available throughout Ontario. According to the RCMP, cryptocurrency fraud went up by more than 400% between 2017 and 2020, and in one 8-month period of 2020 alone, Canadians lost more than $11 million to digital currency scams.
Below, we will discuss a few common types of cryptocurrency fraud currently making headlines and provide tips on how to avoid becoming a victim yourself.
Two Ontario Women Lose Thousands in Investment Scams
CTV recently reported on two women who were each scammed out of thousands of dollars through connections they met online who encouraged them to invest funds in cryptocurrency. One woman, identified only as Lee, was contacted by someone on Facebook who said they could help her earn “easy money” through investing in digital currency. She made a relatively small initial investment of $2,000 and saw that her ‘wallet’ seemed to be increasing quickly. Seeing what looked like a positive result, she soon drained her savings, her RRSP, and even borrowed funds from friends, investing a total of $24,000.
However, when she tried to withdraw funds from her account, she learned that things were not as good as they seemed. First, she was informed that there would be a $5,000 tax on withdrawals and an additional $5,000 fee for a ‘miner’s tax’. Eventually, access to her account was frozen before she could withdraw any funds and she now believes it has been drained.
Another woman, identified as Mel, met someone on a dating site who regularly boasted about their prowess in crypto investment, detailing impressive information about their trading accounts. They eventually asked her if they could teach her how to trade herself. Like Lee, Mel started with a relatively small investment but increased the amount when she saw a positive result in her online trading account balance. Once the account hit $100,000, she attempted to withdraw funds and was informed of various taxes and fees she would be required to pay to access her money. All told, she had given the person she met online approximately $80,000, and now says it is likely all gone, with little she can do to get it back.
Gas Station Owner Interferes When Seniors Appear to be Victimized by Scam Involving Bitcoin ATM
In another recent story reported by CBC, a gas station owner in Belle River, Ontario, had a Bitcoin ATM in his store, where people could purchase and sell cryptocurrency using a technology similar to traditional banking ATMs. He began to notice several seniors using the machine and realized many were purchasing bitcoin to pay fines they were told they owed to the RCMP, or the Canada Border Services Agency.
He was alerted to the issue when one elderly man entered the store while on his cell phone, in what appeared to be an argument. When the man asked the shop owner about the Bitcoin machine, he said he had been on the phone with “the RCMP” all day about an accusation that he had been involved in a global smuggling ring. He told the owner he needed to purchase and transfer $6,000 to the RCMP in Bitcoin.
Immediately recognizing this was a scam, the owner was able to stop the man from making the transfer, however, the man had already sent the scammers nearly $1,000 before coming to the store. This was just the first in a series of senior citizens coming into the gas station with similar stories.
The Canadian Anti-Fraud Centre says these calls are increasing in number, often targeting senior citizens, and saying that a package addressed to them has been intercepted at the border because it contains illegal items. The caller then asks the victim to transfer funds to help sort out the issue. The callers can mirror legitimate-looking phone details, so that the calls appear to be coming from government or law enforcement agencies, making them hard to detect. The owner of the gas station has since put a sign on the bitcoin ATM warning people about these fraudulent calls in the hopes of stopping people from falling victim.
Cryptocurrency Fraud is Harder to Trace Than Traditional Bank Fraud
While sometimes it is possible to reclaim funds that were transferred as part of a scam through a traditional financial institution, cryptocurrency transactions are often completely untraceable. In other words, in nearly every case, it is almost impossible to recover any money that is lost.
David Khalif, a cryptocurrency expert, told CTV that it is becoming increasingly common for people to search for victims on social media and other sites, and then target them with promises of quick and easy money if they invest. He says that if an investment seems too good to be true, it probably is. Anyone considering investing in digital currency should be sure to carefully research anyone they plan to work with and ensure a transaction is legitimate before they send any money.
The RCMP warns people that it is very easy for bad actors to use ‘spoofing’ to make a call look like it is coming from the police, Canada Revenue Agency, or another legitimate entity, in order to pressure people into acting hastily. However, people should keep in mind that “Canadian government agencies or police DO NOT demand payment through the exchange of cryptocurrency. Also, even urgent demands by legitimate agencies will provide convenient, secure options and reasonable time to pay.”
For Unparalleled Legal Representation in Civil Fraud Matters Contact Milosevic & Associates
If you require legal guidance with a civil fraud matter, contact Milosevic & Associates in Toronto. Our highly experienced litigation lawyers help our clients navigate even the most complicated disputes. We excel at guiding clients to a creative, cost-effective solution. Call us at 416-916-1387 or contact us online to learn more about how we can help.