There has been a significant rise in investor complaints about crypto-related scams. Learn how to spot the red flags of crypto fraud.
You’ve likely seen news stories about the changing value of various crypto currencies and other crypto assets. And you may be curious about whether investing in crypto could lead to a windfall. But remember that new investing technologies, like crypto trading platforms, still come with the same old cautions: buyer beware.
Consider Emma’s experience (based on real events):
Emma became interested in crypto investing after reading articles condemning traditional market returns and promoting crypto as a smart alternative. On social media, she was enticed by an ad promising huge annual returns of 502%.
The company’s professional looking website made Emma feel confident about investing with them. She provided her bank account number to the crypto trading platform. She also downloaded an app the company said would make the investment process easier for her.
Emma thought she was wisely investing a small amount of money from a recent $1 million inheritance. Weeks later, Emma discovered all her money was transferred overseas.
When she contacted the OSC (1-877-785-1555 or email inquiries@osc.gov.on.ca.), she learned the person she’d dealt with was subject to previous enforcement action. Since he was overseas, the chances of retrieving her money were slim.
There are several crypto trading platforms that have taken steps to be registered in Canada. These platforms are subject to regulatory oversight that helps protect investors. The list includes firms that have entered into a pre-registration undertaking; these firms have specific terms and conditions which should be reviewed before you consider opening an account. You can check to see if a crypto asset platform is registered in Ontario. If you are considering investing in crypto assets, always work with a registered crypto asset trading platform or one that has entered into a pre-registration undertaking.
8 red flags of crypto fraud
- Fake websites: Fraudulent crypto trading platforms can look very similar to legitimate sites, making it difficult for you to tell the difference. These website’s polished look may lure you into sharing personal information, financial information, and crypto wallet passwords that end up in the scammer’s hands. Often these websites use a lot of jargon and have no contact details.
- Celebrity faces: Just because you see a celebrity’s photo on promotional materials, it does not mean the famous face is knowledgeable or actually endorses the company.
- Unsolicited phone calls and emails: You keep getting multiple calls trying to get your personal information such as your crypto wallet details, banking information or to get you to send money.
- No trading experience needed: you’re told not to worry about a lack of trading knowledge. They tell you it’s all done automatically for you, so you don’t need to know anything.
- Asking for access to your computer: You’re told to download an app on your computer (such as AnyDesk) that actually gives the fraudsters access to your computer (often called a “Trojan horse” tactic).
- Too good to be true: You’re offered an unbelievably low price that’s below market value. And you may be guaranteed unrealistically high returns, such as 300% growth..
- Paying more to get less: you’re told you must provide more money before you can make any withdrawals.
- Disappearing act: you can’t reach anyone when you make a request to withdraw money.
If you are concerned about a crypto scam, the OSC is here to help. Contact us at 1-877-785-1555 or email to inquiries@osc.gov.on.ca.
