The Nova Scotia Securities Commission is urgently warning residents about Crypto Scams.
The scam is often referred to as a “pig butchering” scheme and typically proceeds as follows:
— the victim receives an unsolicited message via text, email or social media, or clicks on an ad for crypto trading on social media sites
— the victim is often directed to use a different messaging platform, such as WhatsApp, Telegram or SMS text, through which the scammer attempts to develop a personal relationship with the victim; these platforms make tracing the scammer difficult, if not impossible
— the scammer then persuades the victim to open a crypto trading account and deposit a small initial amount of money by describing great profits
— a short time later, the scammer shows the victim fake account statements indicating large gains and persuades the victim to invest more, which is called “fattening up the pig”; these are fake documents as the scammer has not actually used the money to purchase crypto
— when the victim attempts to withdraw money from the account, the scammer demands fictional taxes or fees to access their funds; if the victim insists on withdrawing funds, whether or not they have paid the additional amounts, the scammer continues to delay or disappears.
The scammer’s gain access to the victim’s deposited funds through the crypto-account and instruct the victim to download trading apps and file-sharing software allowing the scammer access to the victim’s phone or computer sharing their personal and financial information so they can steal more money. Sometimes the scammer sells to other scammers to further exploit the victim.
Once the victim has lost money, often the scammer will contact them again posing as someone who can get the money back for a fee. Also known as a recovery scam. The money is unlikely to be recovered.
The commission wants to know about any losses, but typically, there is little they can do to recover the funds. The technology they use, seldom leaves a trail and even if they can be identified, they usually outside of Canada and the U.S., so beyond the reach of security regulators.
Important information and advice for people considering trading in crypto assets:
— crypto asset trading is highly risky, especially from scams, but also from volatility, hacking and other risks including technology failures
— only use crypto asset trading platforms or dealers registered in Canada; a list of registered platforms is on the commission website
— giving out any personal or financial information, or downloading trading apps or file-sharing software, opens people to financial and identity theft
— people should never use credit cards or lines of credit to invest
— losses from crypto assets scams are often significant and unrecoverable.
“While there are always fraudsters inventing new schemes, these so-called ‘pig butchering’ scams involving crypto assets have become very prevalent and are claiming many victims, many with very large losses. Everyone should be very wary for themselves and their friends and family members of unsolicited messages or advertisements recommending investment in crypto assets. Regulators in North America believe more than $1 billion has been lost to crypto scammers since 2021 and that amount only continues to increase. Canadians who wish to trade crypto assets should do so only through Canadian-registered crypto trading platforms or dealers.”
– Paul Radford, Chair, Nova Scotia Securities Commission
Quick Facts:
— it is illegal to solicit investments in Nova Scotia without registering with the commission and complying with Nova Scotia securities laws, unless an exemption applies
— crypto trading platforms must register with securities regulators to legally operate in Canada
The only real protection is to recognize and avoid the scams.
To file a complaint or report a scam to the Nova Scotia Securities Commission: https://nssc.novascotia.ca/recognize-and-report-scam
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