The Financial and Consumer Services Commission (FCNB) is warning New Brunswickers of fraudsters who are using social media and dating websites to lure people into crypto-asset investment scams.
In the first nine months of 2021, 20 New Brunswickers reported losing nearly $ 711,000 in crypto investment scams, according to the Canadian Anti-Fraud Centre (CAFC). It estimates 95 per cent of frauds and scams go unreported because victims are often too embarrassed to report or don’t know where to turn.
This trend is also appearing elsewhere in Canada. The British Columbia Securities Commission along with the RCMP, municipal police forces and the Canadian Anti-Fraud Centre recently warned its residents of similar activity.
Fraudsters are using a number of tactics and technologies to defraud victims in these crypto-asset investment scams, often approaching them through dating apps or through friend requests on other social media sites.
In one scenario, the fraudster develops an online relationship with the person over several weeks before recommending an investment opportunity in crypto assets. The fraudster then guides them to a fraudulent crypto investing website and provides step-by-step instructions on how to “invest” the money through the site. The fraudster often urges the person to continue investing or to pay a “tax” on the amount invested, resulting in additional losses.
In another scenario, the fraudster hacks a friend’s social media account and, posing as the friend, convinces the victim in a supposed crypto-asset investment opportunity.
A third scenario sees the fraudster calling the victim directly with a crypto-asset investment opportunity. While making the pitch, the fraudster convinces the person to provide remote access to their computer. They direct the person to a fake crypto investing website that promises guaranteed returns on their investment. When the person tries to withdraw the money, they realize the website is fake and their money is gone.
In some cases, the fraudster convinces the person they will use their investment money to buy digital currencies. The victim sends the money and then all communication is cut off.
FCNB is urging New Brunswickers to exercise caution when buying or selling crypto assets. Individuals and firms in the business of advising or trading in securities or derivatives in New Brunswick must be registered with FCNB.
How to protect yourself
- Online investments involving trading in crypto assets by unregistered entities present a significant risk. You could potentially lose your entire investment, and you may have little recourse if there is a problem with your account. There is no guarantee that the crypto-asset trading platform will have enough cash or crypto-assets available when you want to make a withdrawal and may refuse to redeem your investment proceeds.
- Dealing with firms and/or individuals that are registered with FCNB protects investors because FCNB will only register firms and individuals if they are properly qualified and meet a certain standard. Learn about how registration protects investors and use the National Registration Search tool to check if an individual or firm is registered.
- Before investing, be sure you understand how the investment works and what fees and risks are associated with it. Ask these questions to help you become informed.
- If you are uncertain or have questions about an investment opportunity, get a second opinion or seek professional advice.
- For more information on how to become better informed about investment products and services, visit FCNB.
For more information
Investors are urged to contact FCNB toll-free at 1 866 933-2222 or through its website if they have any concerns about the legitimacy of an investment opportunity. If you have been a victim of a scam, fraud or cybercrime, please contact your local police force.