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Cryptocurrency fraud is costing B.C. residents significant amounts of money, and police are warning people to protect themselves against this type of fraud.
Cryptocurrency is digital money that was created as an alternative to government-issued currency. All cryptocurrencies use blockchain — a digital database where transactions are cryptographically stored — to operate a ledger, storing and sharing data across a large global network of computer servers. The best-known cryptocurrency is Bitcoin.
B.C. RCMP have received multiple reports of individuals losing large sums of money after investing in fraudulent cryptocurrency apps. Scammers typically reach out through text messages, emails, or social media, claiming they’ve made thousands of dollars through cryptocurrency investments. They then convince victims to deposit money into a fake investment app.
Once the money is deposited, the app displays fictitious profits to create the illusion of a successful investment. The scammers use this to pressure victims into investing even more.
When victims grow suspicious and attempt to withdraw their funds, the scammers demand a large “processing fee”. Fearing the loss of their investment, many victims pay the “processing fee,” but ultimately end up losing both the fee and their investment.
A second layer of fraud is sometimes added after the initial scam has been discovered. The fraudsters will assume a new identity and reach out to the victim, claiming to be from law enforcement or saying that they are from a “recovery service,” and that they can get the money back, but only after payment of a “recovery fee,” which is another scam. Legitimate law enforcement officers will never ask for a payment in order to help you recover money or goods.
“These scammers rely on high-pressure sales tactics to create a false sense of urgency and fear of missing out, pushing people to make impulsive decisions without thinking them through,” says Acting Sergeant George Han of the Coquitlam RCMP. “Do not rush. Call someone and discuss the investment before making any decisions.”
The lack of regulation and oversight of cryptocurrencies puts investors at risk. It is also a relatively new, and somewhat complex, market, meaning that many investors are unaware of potential dangers and risks. Fraudsters will often try to dismiss these dangers and risks, claiming that investors don’t need to understand the crypto market in order to make money.
There are ways to safeguard yourself against cryptocurrency frauds:
– Be cautious of unexpected calls, emails, or messages.
– Never send money or cryptocurrency to someone you don’t know.
– Don’t give anyone remote access to your computer.
– Avoid downloading unknown software or apps.
– Be wary of investments that offer unusually high returns in a short amount of a time. Remember: If it sounds too good to be true, it probably is.
If you think you have been scammed, immediately stop all communication with the scammer, and do not send them any more money. Alert your financial institution, and report the issue to the Canadian Anti-Fraud Centre or call 1-888-495-8501. Also contact your local police of jurisdiction.
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