Canadians are losing millions of dollars to cryptocurrency fraud schemes and at least one Ontario detective who specializes in the field predicts that such scams will soon overtake wire transfers as the largest payment method used by fraudsters.
Ontario Provincial Police are warning potential cryptocurrency investors to do more to protect themselves as the digital currency grows in popularity.
OPP Det.- Const. John Armitt of the Anti-Rackets Branch says crypto scam cases are difficult for police to solve because the currency can be quickly sent to exchanges in different regions around the world that may or may not be willing to cooperate with police in the province.
“Once you send your crypto, it's almost gone. It's very challenging to get it back,” he said.
According to the Canadian Anti-Fraud Center, Canadians lost more than $94 million in crypto payments between January 1st and September 30th of this year. That compares to a $124 million loss in all of 2023, up $19 million from the previous year.
In Ontario, victims lost nearly $23 million to crypto investment scams between Jan. 1 and Sept. 30 of this year, data shows. The problem is so pressing for police that last month, the OPP launched Project Atlas, an initiative to combat cryptocurrency investment fraud and protect victims in Ontario and abroad.
As with most crypto fraud schemes, people come to online ads to buy crypto for less than $250, Armitt says. Once they invest, the suspect will direct them to a web page to show them how much their money has grown and encourage them to invest more.
Eventually, the victims discovered that the profits they made were fake and they lost their crypto and money.
With the value of some cryptocurrencies reaching new highs, more criminals are trying to get their hands on them, experts say. This includes a kidnapping incident in Toronto last month, where the CEO of a crypto company was robbed downtown during rush hour and held for a $1 million ransom. Dean Skurka, president and CEO of Toronto-based financial firm WonderFi, was released after electronically paying a $1 million ransom, a source close to the investigation previously told CBC Toronto.
The CEO of a Toronto company specializing in cryptocurrencies was kidnapped Wednesday and held for a $1 million ransom, police said. CBC's Chris Glover has the latest.
Armit says that while the OPP has seen extortion fraud in the past, the November incident was unusual and he suspects that such extortion cases will happen soon.
“We're just finding that organized crime is becoming more brazen these days,” he said.
Since Project Atlas began, Armitt says researchers have identified 2,000 cryptocurrency wallet addresses of victims in 12 countries and victims around the world.
How to Avoid Crypto Scams
If you are interested in investing in crypto, this is the best way to do it Using a provincially regulated companysays Perry Quinton, investor education and outreach manager at the Ontario Securities Commission (OSC), the province's independent agency responsible for regulating Ontario's capital markets.
According to the OSC's website, each of those companies is subject to terms and conditions outlined by regulatory bodies, including at the national level. One of the commitments it asks from platforms is to ensure they don't spend customers' crypto investments or use them as collateral.
Even with those protections, however, Quinton has a caveat.
“Crypto assets are high risk … don't use money you can't afford to lose because it's a highly speculative activity,” Quinton said.
Some red flags to watch for are unwanted calls or messages, as well as endorsements by celebrities and social media influencers, she says. When in doubt, double-check a company with multiple resources, such as an investment advisor.
And the most important tool an investor can use to protect themselves from losses or fraud is education, says Lucas Matheson, CEO of Coinbase Canada, a registered crypto dealer in Ontario. Learning crypto protocols is a good place for people to start, he says. This means knowing the rules of how digital currency works and is exchanged.
“I think what we learned from the US election is that crypto is here to stay,” he said.
But Matheson also encourages people to be prudent along the way.
“Our parents told us, 'If it's too good to be true, it's probably too good to be true,'” he said.
