According to the Canadian Anti-Fraud Center, more and more Canadians are being defrauded by cryptocurrency investment scams. Some people even get scammed on social media.
Stephen Carr, an Ontarian from Meaford, himself lost most of his retirement savings, nearly half a million dollars, last year. He says he fell victim to a cryptocurrency investment advertisement on YouTube.
Everything was done on a platform called Atomic Traders with the help of advice from one of their brokers.
After initially investing $250, Stephen Carr's investment had almost doubled in value in almost four days.
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After being robbed of nearly $500,000, Ontario man Stephen Carr vowed never to invest online again.
Photo: Submitted by Stephen Carr
He wanted to withdraw a small amount to verify the legitimacy of the process. For this purpose, the funds from Bitbuy and Netcoins were exchanged and then transferred to the Canadian bank.
They invite you to invest more money when you start making relatively high profits.
He ended up investing about $498,000. His investment grew to almost $2 million. When it came time to withdraw his money, he says, things got complicated.
According to the Atomic Traders broker, in order to be able to withdraw larger amounts from your investments, you have to set up a blockchain wallet on the Binance platform.
After making the transfer, Mr. Carr received a very official-looking document from Binance stating that he was required to post a deposit of approximately $150,000 under the United States and Canada's Federal Anti-Corruption Act.
Then I suspected an anomaly. I now realize that this entire operation is a scam. The very elaborate and convincing trading platform is just a simulation, and this company is illegally impersonating legitimate organizations.
Since then, he has sent several letters to the broker demanding that his account be closed and his money returned without receiving a response.
Stephen Carr contacted the Toronto Police Department and the Royal Canadian Mounted Police (RCMP) Anti-Fraud Unit, but both agencies confirmed that the likelihood of recovering his funds was almost unlikely.
After being cheated on, he suffered numerous panic attacks and had suicidal thoughts. He is now thinking about selling his house.
An epidemic, many believe
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Canada is experiencing an epidemic of cryptocurrency investment fraud, according to lawyer David Milosevic.
Photo: Submitted by David Milosevic
Stephen Carr is far from the only victim of cryptocurrency-related scams.
According to the Toronto Police Fraud Bureau, 245 cryptocurrency scams have been reported since the beginning of May this year. They resulted in losses of just over $21 million.
One of the investigators, David Coffey, says these scams typically use social media to lure victims of investment, romance and employment scams.
But investment fraud accounts for the largest losses: more than $300 million in 2022, according to the Canadian Anti-Fraud Centre.
David Milosevic is a commercial lawyer at the law firm Milosevic & Associates (New Window). This year, his office received between 40 and 60 inquiries a week from customers who had been scammed.
It is a real epidemic of cryptocurrency fraud.
According to Mr. Milosevic, Stephen Carr’s situation is a typical case of cryptocurrency investment fraud.
Customers start investing large amounts and scammers post fake winning results on their websites. Customers are therefore starting to invest even more. As soon as the fraudsters steal the invested funds, the money disappears, explains Mr. Milosevic.
While some scammers occasionally reimburse their customers five or six figures, this only serves to encourage them to invest more.
The scammers' methods are very sophisticated, but the long-term result is always a massive loss and all customers become victims.
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According to Banking and Investment Ombudsman Sarah Bradley, cryptocurrency investment fraud is the top issue people report related to cryptocurrency platforms.
Photo: Submitted by Sarah Bradley
Sarah Bradley is the Banking and Investment Ombudsman (New Window), who often intervenes when cryptocurrency fraud complaints affect legitimate cryptocurrency businesses.
In 2022, about 11% of investment complaints related to cryptocurrency platforms. In 2023, in their opinion, this percentage will reach 15%. About 90% of these cases involved fraud.
“Cryptocurrency investment fraud is unfortunately the number one problem people report about cryptocurrency platforms,” says Sarah Bradley.
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Refund unlikely
Although it is illegal to trick someone into investing or providing funds based on a false statement, lawyers' ability to expose criminals remains limited, according to David Milosevic. Often only less experienced fraudsters are punished.
If the funds are in Canadian or American banks, we can freeze these accounts and retrieve the information to determine who is managing them and potentially recover the funds, he explains, adding that the funds can also be recovered if fraudsters spend them on real estate.
However, most scammers send the money to international banks, most commonly in Hong Kong or Malaysia.
Other than these special circumstances where the money goes through a Canadian or US bank, there is little we can do to recover the funds.
How do you protect yourself?
Although lawyers can recover their clients' funds in some cases, the costs associated with this process can be prohibitive for some. That's why David Milosevic focuses on preventive advice instead.
If someone contacts you on social media and promises you huge sums of money, don't respond. It's illogical for someone to casually approach strangers with something so lucrative.
Same story by Stephen Carr.
We have been led to believe that the Internet provides a safe platform. That's not the case. There is a lot of fraud. Don't do anything on the internet. Visit real people, find out where they work and shake their hands, he advises.