Investment scams are nothing new, but over the past few years, they have exploded across Canada.
According to data from the Canadian Anti-Fraud Centre (CAFC), the amount of money reported lost to investment scams has multiplied by nearly 20 times from 2019 to 2023.
“Unfortunately, investment scams have been one of the main factors in the sharp increase in reported money loss to the CAFC in the last few years,” said Jeff Horncastle, a CAFC spokesperson in an email to CTV News.
“The CAFC estimates that over 50 per cent of investment fraud reports and money loss are associated to fraudulent crypto investment platforms.”
The CAFC says they received 489 reports of investment fraud from 388 Canadian victims, totalling more than $15.7 million in 2019.
In 2023, the centre received 4,010 reports from 3,631 victims for a total of $309.3 million.
“Typical investment frauds offer get rich quick opportunities and higher than normal returns. These frauds often result in investors losing most, or all, of their money,” said Horncastle.
“The majority of the investment scam reports involve Canadians investing in cryptocurrency after seeing a deceptive advertisement online.”
Statistics specifically for Ontario paint a similar picture in terms of the growing issue of investment scams. In 2019 the CAFC received 145 reports from 124 victims totalling a little more than $4.5 million
Four years later, that annual total has swelled to 1,341 reports with nearly $111.3 million in losses.
“Ontarians are giving money away at an alarming rate and its large sums,” said Det. Shaun Wahbeh with the Ottawa Police Services (OPS) Organized Fraud Section.
According to OPS, an average of one or two cases of investment fraud are reported in the capital every single day.
“These are people that are reporting. Frauds tend to go unreported because of embarrassment, shame or people just want to forget about it,” said Wahbeh.
“They average from $50,000 to the highest, which is $4 million.”
For those who have fallen victim of investment scams, the situation can be devastating.
“It’s just horrible. You can’t even sleep at night. I’ve been having a hard time sleeping for the last couple of months now,” said Victoria Lloyd.
“It’s just not fair that we worked for all of our lives. I worked for almost 40 years in the government and now all of our money is going to pay the interest on this line of credit that somebody else took.”
A cryptocurrency scam left Doug Lloyd and his wife Victoria out more than $177,000. (Austin Lee/CTV News Ottawa)The Lloyd’s have filed a police report, but they aren’t overly hopeful that they will recoup that money.
OPS says investment fraud cases, specifically those involving cryptocurrency, are incredibly difficult cases to crack.
“As law enforcement, we’re able to trace it if it’s within a short window because it’s virtual money so it jumps from wallet, to wallet, to wallet,” said Wahbeh.
“These are some of the toughest cases because the money rarely stays in our jurisdiction.”
Wahbeh adds that the money often ends up overseas. He says countries like Russia and Nigeria are two of the primary landing spots for these types of scams.
“There are certain countries that don’t play well with Canada, and there are certain countries that don’t have any laws at all when it comes to currency or cybercrime, so it falls into the cracks.”
The CAFC says common methods of solicitation used by fraudsters include:
Search engine optimization
Compromised social media accounts
Ads on the internet and social media
Emails or text messages
Direct phone calls from fraudulent crypto investment companies
The CAFC has provided a list of warning signs and tips on how to protect yourself from investment fraud:
Be careful when sending cryptocurrency. Once the transaction is completed, it is unlikely to be reversed.
Be wary of individuals met on dating sites or social media who attempt to educate and convince you to invest in cryptocurrency.
Canadians need do their research to ensure they are using reputable and compliant services.
Proceeds of crime and anti-money laundering regimes around the world create regulatory frameworks that treat businesses dealing in cryptocurrencies as money service businesses
Prior to investing, ask for information on the investment. Research the team behind the offering and analyze the feasibility of the project
Some fraudsters will use the name of legitimate companies to lend credibility to the fraud and convince victims to send money. Verify email addresses, URL’s, phone numbers and their physical address.
Verify if the investment companies are registered with your provincial securities regulator or the National Registration Search Tool.
If you receive a suspicious or odd investment related message from a trusted friend, reach out to them through a different means of communication to confirm that it is them.
Beware of fraudsters asking you to open and fund new crypto accounts, they will direct you to send it to wallets they control – Don’t!
Question why someone is reaching out to you about an investment offer: Is this a conversation I would usually have with an unknown person? Does it make sense to invest in an opportunity based on the communication I had? Should I feel pressure or urgency when deciding to invest?
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
