May 30, 2024
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Love and money: the two areas of vulnerability for most people. Turns out these are also the two areas of focus for sophisticated online scams. According to the Canadian Anti-Fraud Centre (CAFC) and the Canadian Investment Regulatory Organization (CIRO) online scams involving cryptocurrency and false promises of romance are on the rise in Canada.
The CAFC noticed an increase in romance-to-investment scams, also known as "pig butchering.” Victims are contacted on dating apps or social media by a fraudster who claims to have been successful in cryptocurrency investments. These fraudsters use fake online trading platforms and convince victims to transfer funds or cryptocurrency into their trading account.
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In some cases, when victims request their money back, the fraudster agrees but demands additional funds, claiming extra taxes and fees. There is often another layer of fraud when victims are approached by new fraudsters offering to help recover their funds for a fee.
Red flags to look out for
To help Canadians not fall for these fraudulent claims, the CAFC offers four red flags to look out for:
- Unsolicited messages from strangers on social media, dating apps or websites and text messages leading to prolonged exchanges, often moving to private messaging apps
- Mention of easy money or get rich quick schemes using the crypto market, often based on exclusive information or through supposed professional traders
- Encouragement to visit crypto-related websites, which may appear legitimate and use terms like "investment packages" and "guaranteed rates of return”
- Provision of financial records showing returns or allowing a small withdrawal to create a false sense of legitimacy
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What Canadians can do
In addition to watching out for red flags, Canadians can use a number of tactics to avoid these scams.
- Always consult with a financial professional if approached about an investment opportunity.
- Be cautious of any online suggestions with regard to investing in crypto or transferring funds to specific platforms — particularly unfamiliar platforms.
- Be skeptical of any promise of a large, quick, no-risk return. Let's face it, if it was that easy why isn't everyone doing it?
- Report suspected investment fraud to the CIRO, CAFC and local police.
Financial impact of fraud: How investment, social media and looking for love costs us
Investment fraud losses totalled $309.4 million in 2023 — the highest type of loss reported to the CAFC in 2023. A close second were losses due to social media fraud, with $172 million lost in 2023, according to CAFC data.
Not surprisingly, the CAFC also reported a rise in romance scams. Quite often, these scams are tied to criminal rings located outside of Canada. Over the last few years, romance scame have prompted losses in excess of $1 million.
Read more: The ultra-rich are bailing on volatile stocks right now — these 4 shockproof assets are their new safe havens
How to invest in crypto the right way
The world of cryptocurrency is largely unregulated and highly volatile, since there are no perfect indicators for predicting the price of cryptocurrencies. It’s purely based on individual demand and supply speculation. However, since consumer demand and risk appetite is high amongst Canadian investors still interested in this crypto, various crypto-specific exchanges and indexes are popping up, and you can even invest your TFSA or RRSP in the Bitcoin ETF.
Wealthsimple Crypto is Canada’s first regulated crypto trading platform. Although it doesn’t offer access to a personal wallet, your crypto-assets are kept in cold storage at Gemini Trust Company – a trusted and regulated custodian that has $200M in cold storage insurance coverage. It functions as an entirely self-directed platform where you can buy and sell Bitcoin and Ethereum – the world’s two largest cryptocurrencies – instantly and without commission fees. Open up a Wealthsimple Crypto account and enjoy no commission, no fee minimum balance and no fees for transferring funds.
If you’re interested in investing in crypto but are turned off by the asset’s legendary volatility and don’t feel comfortable buying and trading on your own, you might want to consider buying an exchange-traded fund (ETF) that lets you invest in Bitcoin without having to buy and store the digital currency yourself.
Purpose Investments’ Bitcoin ETF (BTCC) is the first Bitcoin ETF in the country and does all the buying and selling of the digital asset for you, so you can be a passive Bitcoin investor. You can purchase the ETF from an online brokerage platform like Questrade, which offers a host of other investment options at very affordable fees.
What To Read Next
- How to protect yourself from cryptocurrency fraud
- Don’t want your credit card hacked? Avoid these 4 fraud schemes
- Should you buy bitcoin in your TFSA and RRSP?
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Nicholas completed his master's in journalism and communications at Western University. Since then, he's worked as a reporter at the Financial Post, Healthing.ca, Sustainable Biz Canada and more. Aside from reporting, he also has experience in web production, social media management, photography and video production. His work can also be found in the Toronto Star, Yahoo Finance Canada, Electric Autonomy Canada and Exclaim among others.
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