Nova Scotia warns public of crypto scam resulting in ‘unrecoverable’ losses

Click to play video: 'Nova Scotia warns of crypto scams causing ‘unrecoverable’ losses'
Nova Scotia warns of crypto scams causing ‘unrecoverable’ losses
WATCH: Cypto-scams are growing in popularity across the province. Over the past six months, dozens of Nova Scotians have lost tens of thousands of dollars. Alicia Draus has more on how the scams work and what you can do to avoid becoming a victim. – Jan 9, 2023

The Nova Scotia Securities Commission is warning residents of a crypto scam, which it says is often cruelly referred to as a “pig butchering” scheme.

The commission said in a Monday morning release the scam is causing “individual losses of hundreds of thousands of dollars,” across Canada and the U.S. It’s estimated more than $1 billion has been lost to these scams in North America since 2021.

According to the release, the scam starts with an unsolicited message over text, email or social media, or when a victim clicks on a crypto trading ad online.

The victim is then often asked to communicate through another messaging platform, such as WhatsApp, Telegram or SMS, which “make tracing the scammer difficult, if not impossible,” the province said.

Story continues below advertisement

Scammers attempt to develop a personal relationship with a victim, and then persuade the victim to open a crypto trading account where they will deposit a small amount of money. The province said scammers will often say “great profits that can be made by ‘investing’ in crypto.”

After the first deposit, the scammer will show the victim screenshots of fake “account statements” showing large gains to convince the victim to invest more. This strategy is called “fattening up the pig,” the province said.

“These are fake documents as the scammer has not actually used the money to purchase crypto.”

Next, the scammer will tell the victim they must “pay fictional taxes or fees to access their funds” when the victim wants to withdraw their money from the account. Whether or not the victim pays these fees, the scammer often vanishes.

“The scammers not only gain access to the victim’s deposited funds but instruct the victim to download trading apps or file-sharing software that gives the scammer access to the victim’s mobile device or computer to obtain personal and financial information they can use to steal more money,” the security commission warns.

“The scammer will also sell this information to other scammers, who will try to further exploit the victim.”

Story continues below advertisement

It said the final part of the scam is a “recovery scam,” when the victim is contacted by someone who says they can get their lost money back for a fee.

“If you are victimized, it is unlikely you will recover your money,” the province said. Officials advise Nova Scotians to not respond to unsolicited requests or ads that ask for money to recover losses.

According to the commission, not much can be done once a person is victimized by a crypto scammer.

“While the Commission is interested in receiving reports of losses by crypto investors from these scams, from experience there typically is little that can be done to recover these funds,” read the release.

The only way investors can protect themselves is by recognizing and avoiding the scam.

Click to play video: 'How the collapse of FTX crypto puts future of industry at risk'
How the collapse of FTX crypto puts future of industry at risk

Paul Radford, chair of the Nova Scotia Securities Commission, said in the release these scams have become very prevalent and claim many victims.

Story continues below advertisement

“Everyone should be very wary for themselves and their friends and family members of unsolicited messages or advertisements recommending investment in crypto assets,” Radford said.

“Canadians who wish to trade crypto assets should do so only with Canadian-registered crypto trading platforms or dealers.”

A list of registered platforms is available on the NSSC website.

But, the commission warns that crypto asset trading is “highly risky” from scams, volatility and hacking. It advises the public to never use credit cards or lines of credit to invest, as “losses from scams are often significant and unrecoverable.”

Sponsored content