Top 3 crypto scams of 2024: Protect yourself from social media, romance and recovery room scams
By Rebecca Vargese
2023 was a year that saw the crypto industry marred by controversy. Beginning with the collapse of FTX to the more recent money laundering charges against Binance’s Changpeng “CZ” Zhao, there have been many scandals and frauds plaguing the industry. As we move into 2024, crypto scams continue to be a pressing issue worldwide, including in Canada.
The Alberta Securities Commission recently released the top crypto-related scams to watch out for in 2024. This list is based on investor complaints, ongoing investigations and current enforcement trends.
Let’s take an in-depth look at the top three scam variations that made the list and break down the tactics fraudsters use to target everyday Albertans.
Social media deepfakes and celebrity endorsements:
The explosion of Artificial Intelligence (AI) tools, like AI-generated images and voices, have made it easier for fraudsters to bait Canadians with crypto scams.
In November 2023, the Canadian Security Intelligence Service (CSIS) reported the growing economic and financial threats from artificially generated fake visuals known as deepfakes. It highlighted rising cases of fraudulent deepfake videos and images featuring well-known individuals — including that of Canadian Prime Minister Justin Trudeau, popular business icon Elon Musk and actor Tom Hanks — used in social media promotions to lure Canadians.
Celebrity endorsements, genuine or not, may seem enticing. Regardless of how convincing they look or sound, actors, models, athletes, politicians or entrepreneurs are not reliable or qualified sources of financial advice. Remember that endorsements are never a guarantee of legitimacy or investment returns.
Whether an advertisement uses a celebrity endorsement or not, promises of high returns, risk-free investing or free money are significant red flags of fraud. Always check first — anyone offering investment products or financial advice must be registered with the Alberta Securities Commission or another provincial securities commission.
Romance scams:
After the COVID-19 pandemic, dating app fraud, romance scams, and “pig butchering” have become commonplace and a topic in our social media conversations. The Canadian Anti-Fraud Centre (CAFC) observed that, despite only five to 10 per cent of such frauds typically being reported, there has been a significant uptick in romance-based investment scams in recent years. The agency received more than 650 reports of such scams between January and September 2023, with total losses estimated at upwards of $29.8 million. Closer home in Alberta, there were 70 reports of romance scams and losses exceeding $2.6 million.
While these scams are often thought of as only targeting those looking for romance, this is an oversimplification of this tactic. Fraudsters take advantage of vulnerable people looking for friendship or love to connect with potential victims. Once a relationship is established, they exploit the trust and attachment created to request money or fabricate investment opportunities, often related to crypto.
Signs of a romance or dating scam include an internet stranger expressing love or affection too soon. They may then avoid meeting in person or on video calls, and eventually ask for money, crypto or offer a crypto investment that they can invest in on your behalf. Always be cautious of new friends or acquaintances that take an immediate interest in your finances or offer investment advice.
Recovery room scams:
As interest in crypto continues to soar, fraudsters are increasingly deploying what’s called “recovery room” scams to further defraud victims.
In this type of fraud, con artists impersonate regulators, recovery agencies or law enforcement and attempt to defraud victims again under the pretext of recovering their lost crypto assets or funds for a fee. To make it more convincing, fraudster’s target these recent victims using information from the original scam.
Stay alert for red flags like fee requests and demands for banking or personal details. Neither law enforcement agencies nor the Alberta Securities Commission will ever contact you with an offer to recover your money or assets for a fee. Any unprompted communication offering to do so should raise suspicions.
Remember — recovering crypto is extremely difficult and is a long and arduous process with no guarantees. If it sounds too good to be true, it probably is.
Protect yourself:
Being aware of the red flags of fraud is crucial in an investor’s journey. There are also additional steps investors can take to protect themselves and help others:
Check registration. Albertans should ensure that any company or individual they plan to invest with is registered with the Alberta Securities Commission. You can complete your checks by consulting the Canadian Securities Administrators National Registration Search.
Stay alert. Research any opportunity thoroughly before you invest. To help, the Alberta Securities Commission maintains an Investment Caution List that includes the names of companies that are not registered with the ASC and appear to be engaging in activities that either require registration under Alberta securities laws or may be investment scams.
Know where to turn. If you suspect you or someone you know has lost money to a crypto investment scam, file a complaint with the Alberta Securities Commission via email complaints@asc.ca or call us at 403-355-3888.
Taking time to further understand common crypto scams can help you recognize, avoid and report them. Visit the crypto scams page for more information.
This article was originally published on the Alberta Securities Commission’s (ASC) investor education website CheckFirst.ca. The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate, and harmonize the regulation of Canada’s capital markets.
