In a stark warning to Canadian citizens, the Canadian Anti-Fraud Centre (CAFC) has sounded the alarm about a surge in crypto scams, particularly pig butchering and investment schemes. The CAFC, in collaboration with the Canadian Investment Regulatory Organization (CIRO), has issued a warning to raise awareness about these sophisticated scams, particularly those involving prolonged online communication.

Pig Butchering and Romance Scams on the Rise

The CAFC has identified two specific types of cryptocurrency scams targeting Canadian citizens: pig butchering or romance scams, and investment scams. In these schemes, fraudsters establish a friendship or online romance, then propose an investment opportunity involving crypto assets, often promising unrealistic returns.

Victims are frequently presented with fraudulent investment platforms and coerced into signing up. Once their identity is compromised, scammers lock their invested funds, leaving them unable to access their money. However, in the initial stages, victims are allowed to withdraw small amounts to give the appearance of legitimacy.

Investment Schemes Promise Unrealistic Returns

Scammers create fraudulent investment platforms and coax victims into signing up. Once the victim's identity is compromised, the scammers lock their invested funds, leaving them unable to access their money. However, in the initial stages, victims are allowed to withdraw small amounts to give the appearance of legitimacy.

Reporting Scams Crucial

Canadian citizens are strongly urged to report any instances of fraud to the CIRO, CAFC, and local law enforcement agencies. The prompt reporting of such incidents helps authorities track and combat these scams effectively.

2023: A Record Year for Investment Fraud

In 2023, Canadians fell victim to investment frauds amounting to a staggering $309.4 million, making it the most prevalent type of scam that year. Social media-related frauds alone accounted for $172 million of that total.

International Crypto-Asset Reporting Framework (CARF)

As part of the 2024 annual budget, Canada plans to adopt the international Crypto-Asset Reporting Framework (CARF) by 2026, specifically for taxation purposes. The CARF will introduce new reporting requirements for crypto asset service providers (CASPs), including cryptocurrency exchanges, crypto-asset brokers and dealers, and crypto-asset automated teller machine operators, whether they are individuals or businesses.

Crypto Romance Scams: A Growing Concern

Crypto romance scams have also been plaguing US citizens, resulting in significant financial losses. Just recently, Shreya Datta, a 37-year-old tech professional from Philadelphia, fell victim to a cryptocurrency romance scam that left her financially ruined with losses mounting to $450,000.

Authorities Combat Pig Butchering Scams

Erin West, Deputy District Attorney in Santa Clara, California, has revealed that she receives an average of 5-6 emails daily from individuals who have fallen prey to pig butchering scams. The most recent victim lost $5 million dollars, and that's not even the biggest amount one victim has lost to this scam.

Stolen Funds Funneled Overseas

Compounding the issue, the stolen funds are funneled overseas to transnational criminal organizations in Myanmar and Cambodia, using trafficked individuals as virtual slaves to carry out the pig butchering scams.

In light of these alarming trends, Canadian citizens are advised to exercise extreme caution when engaging with individuals who discuss cryptocurrency trading or investments. The CAFC and CIRO urge prompt reporting of any instances of fraud to help combat these scams effectively.