Canadians are losing millions of dollars in cryptocurrency fraud schemes and at least one Ontario detective specializing in the area predicts such scams will soon outpace 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’s popularity grows.
OPP Det.-Const. John Armit with 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 jurisdictions around the world that may or may not be willing to cooperate with police in the province.
“Once you send your crypto, it’s virtually gone. It’s very challenging getting back,” he said.
According to the Canadian Anti-Fraud Centre, Canadians lost over $94 million in crypto payments, from Jan. 1 and Sept. 30 of this year. That’s compared to $124 million in losses in all of 2023, more than $19 million more than the year before.
In Ontario, victims lost nearly $23 million in crypto investment frauds from Jan. 1 and Sept. 30 of this year, the data shows. The problem is so concerning to police that last month, the OPP launched an initiative called Project Atlas to fight cryptocurrency investment fraud and protect victims in Ontario and abroad.
Often with crypto fraud schemes, individuals come across online ads to buy crypto for as little as $250, Armit 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 discover the profit they supposedly made was fake and they’ve lost their crypto and their money.
As the value of some cryptocurrencies approach new heights, more criminals are looking to get their hands on them, experts say. That includes a kidnapping case that happened last month in Toronto, where the CEO of a crypto company was snatched downtown during rush hour and held for $1 million ransom. Dean Skurka, the president and CEO of the Toronto-based financial firm WonderFi, was released after a ransom of $1 million was paid electronically, a source close to the investigation previously told CBC Toronto.
The CEO of a Toronto company specializing in cryptocurrency was kidnapped and held for a $1 million ransom Wednesday, police say. CBC’s Chris Glover has the latest.
Armit says though the OPP has seen extortion frauds in the past, November’s incident was unusual and suspects similar extortion incidents could occur sooner than later.
“We’re just finding that organized crime is being more brazen nowadays,” he said.
Since Project Atlas’s launch, Armit says investigators have identified victims in 12 countries and 2,000 cryptocurrency wallet addresses belonging to victims all around the world.
How to avoid a crypto scam
If you’re interested in investing in crypto, the best way to do it is by using a provincially regulated company, says Perry Quinton, manager of investor education and outreach 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 of platforms is to ensure they don’t spend clients’ crypto investments or use it as collateral.
Even with those protections, however, Quinton has a caveat.
“Crypto assets are high risk … Don’t use money that you can’t afford to lose because this is a highly speculative activity,” Quinton said.
Some of the red flags to watch out for are unsolicited calls or messages, as well as endorsements by celebrities and social media influencers, she says. When in doubt, double-check a company with multiple sources, such as an investment advisor.
And one of the most important tools an investor can use to protect themselves from losses or fraud is education, says Lucas Matheson, the CEO of Coinbase Canada, a registered crypto dealer in Ontario. A good place people can start is by learning crypto protocol, he says. That means knowing the rules of how a digital currency functions and is exchanged.
“I think what we’ve learned from the U.S. election is that crypto is here to stay,” he said.
But Matheson also encourages people to be prudent along the way.
“As our parents told us, ‘If it’s too good to be true, it probably is too good to be true,'” he said.