Investment and cryptocurrency scams
There's nothing new about investment fraud. In fact, there are reports of fraud as far back as 300 B.C. Greece, insider trading in the late 1700s, and stock market, pump and dump scams in the late 1800s. In 2021, victims of investment scams in Canada lost close to $170 million, making it the number one type of fraud reported and causing the highest dollar loss. In the U.S., 2021 was also a record year for investment and cryptocurrency scams with losses of nearly $1.8 billion. There are predictions that 2022 will be a record year for investment fraud.
Select a scam below to learn more.
Cryptocurrency
Cryptocurrencies are unregulated in Canada and operate independently of any financial institution or regulations. This means there is no avenue for recovery nor financial protection when investing with cryptocurrencies. For financial fraudsters, cryptocurrency brings a new twist to an old con.
Means of contact
Scammers send phishing notification emails advising you to log in to your Instagram account with a link to a fake Instagram login page. The victim logs in, allowing the scammer to steal their account credentials. Once the account is in their control, they blackmail the victim to record a video of them promoting a fake cryptocurrency platform. The video is then posted to the victim's social media accounts with a link for followers to invest on a fake cryptocurrency platform.
Tactics used
Means of contact
- Internet
- Phone
Scammers send phishing notification emails advising you to log in to your Instagram account with a link to a fake Instagram login page. The victim logs in, allowing the scammer to steal their account credentials. Once the account is in their control, they blackmail the victim to record a video of them promoting a fake cryptocurrency platform. The video is then posted to the victim's social media accounts with a link for followers to invest on a fake cryptocurrency platform.
Tactics used
- Requests for personal information
- Account numbers
- Impossibly high rates of return in a short time frame
- Special knowledge or "insider" information
- Unregistered or unlicensed salespeople
- High pressure tactics
- Overly complicated investment structure
Cryptocurrency social media phishing
Cryptocurrencies are unregulated in Canada and operate independently of any financial institution or regulations. This means there is no avenue for recovery, nor financial protection when investing with cryptocurrencies. For financial fraudsters, cryptocurrency brings a new twist to an old con.
Recently, there has been an increase in reports of Cryptocurrency phishing investment scams.
Means of contact
Scammers send phishing notification emails advising you to log in to your Instagram account with a link to a fake Instagram login page. The victim logs in, allowing the scammer to steal their account credentials. Once the account is in their control, they blackmail the victim to record a video of them promoting a fake cryptocurrency platform. The video is then posted to the victim's social media accounts with a link for followers to invest on a fake cryptocurrency platform.
Tactics used
Recently, there has been an increase in reports of Cryptocurrency phishing investment scams.
Means of contact
- Social media
Scammers send phishing notification emails advising you to log in to your Instagram account with a link to a fake Instagram login page. The victim logs in, allowing the scammer to steal their account credentials. Once the account is in their control, they blackmail the victim to record a video of them promoting a fake cryptocurrency platform. The video is then posted to the victim's social media accounts with a link for followers to invest on a fake cryptocurrency platform.
Tactics used
- Email phishing attempts posing as one of your social media platforms
- Spoofing websites
- Blackmail and extortion
- Low risk investments with high returns
- High pressure sales tactics
- Investment offers from people and organizations you don't know
- Anti-establishment rhetoric promoting subversion of government or financial institutions
Foreign investment
The Foreign Currency (Forex) market can be volatile and carry substantial risk. It is not the place to put any money that you cannot afford to lose, such as retirement funds, as you can lose most or all of it very quickly.
Means of contact
You are presented with an opportunity to invest on the foreign exchange (Forex) market. They are promising big returns as part of a unique group privy to this special investment opportunity.
Tactics used
Means of contact
- Online and traditional advertising
You are presented with an opportunity to invest on the foreign exchange (Forex) market. They are promising big returns as part of a unique group privy to this special investment opportunity.
Tactics used
- Offers investment opportunities with exceptionally large returns
- Provides credibility by claiming to have special credentials or experience
- Advises you that other savvy people have already invested, and offering to reduce fees if you invest
- Claims it's a limited-time offer and creating a false sense of urgency
- Secret or "special exclusive offers" for certain individuals only
- Money transfer or wires requests to foreign accounts
- Overly complicated investment structures
- Unregistered salespeople who have no license or registration to sell — contact the Manitoba Securities Commission
Ponzi
Named after Charles Ponzi, who in 1919 stumbled upon a money making scam, Ponzi schemes are fraudulent investing scams that generate returns for older investors from money provided by new investors. One of the largest and most famous Ponzi schemes was executed by Bernie Madoff, who defrauded at least 37,000 investors, over the course of 40 years, out of $65 billion.
Means of contact
Scammer recruits investors to buy-in to a higher than normal return on their investment. Using testimonials from earlier investors, as more investors buy in to the investment, the scammer uses the new investors’ money to pay out a return to earlier investors, making the investment appear very profitable. However, the payout will eventually collapse as the well of investors dries up, leaving a majority of the investors out their money.
Tactics used
Means of contact
- Internet
- Phone
Scammer recruits investors to buy-in to a higher than normal return on their investment. Using testimonials from earlier investors, as more investors buy in to the investment, the scammer uses the new investors’ money to pay out a return to earlier investors, making the investment appear very profitable. However, the payout will eventually collapse as the well of investors dries up, leaving a majority of the investors out their money.
Tactics used
- High returns
- Unusual job tasks, often using your own funds upfront or through a cheque deposit
- Special "exclusive" investment opportunities
- Investment offers from people and organizations you don’t know
- High pressure sales tactics
- Avoiding answering questions about the return on your investment
Pump and dump
Investment fraud is the number one scam in Canada when it comes to dollars lost. Those who purchase stocks and are aware of the risks involved can't always spot when it's fraud. Never invest more than you can afford to lose.
Means of contact
The scammer pumps up the value of a stock, usually one that they already own, and once investors buy in and the stock hits a peak, the scammer dumps the stocks, leaving the victims holding worthless stock.
Tactics used
Offers an incredible deal on low-priced stocks and high returns.
What to look for
Means of contact
- Internet
- Phone
The scammer pumps up the value of a stock, usually one that they already own, and once investors buy in and the stock hits a peak, the scammer dumps the stocks, leaving the victims holding worthless stock.
Tactics used
Offers an incredible deal on low-priced stocks and high returns.
What to look for
- Investment offers from people or organizations you don't know
- High-pressure sales tactics
- Low-risk investments with high returns
Pyramid or gifting circle
Pyramid scams generate profits by enticing investors to recruit others to invest in order to recover your investment, thereby creating a pyramid.
Means of contact
This scam is similar to Ponzi scams, but this new version is also referred to as “gifting circle” where you buy in, then need to find more people to invest so you can recoup your money. In some cases, a product is offered as part of the investment, but it’s of little-to-no value.
Tactics used
Promises of high returns on your investments.
What to look for
Means of contact
- Internet
- Phone
This scam is similar to Ponzi scams, but this new version is also referred to as “gifting circle” where you buy in, then need to find more people to invest so you can recoup your money. In some cases, a product is offered as part of the investment, but it’s of little-to-no value.
Tactics used
Promises of high returns on your investments.
What to look for
- Requests to refer a friend as part of the invstment
- Avoids answering questions about the investment
- High pressure, time-limited tactics