The Canadian Anti-Fraud Centre (CAFC) has recently highlighted a significant increase in cryptocurrency scams affecting Canadian citizens. The rise in two particular types of scams — pig butchering (romance scams) and investment scams — has prompted the CAFC, in collaboration with the Canadian Investment Regulatory Organization (CIRO), to issue an urgent warning.
Navigating Pig Butchering Scams: Understanding the Tactics Behind Crypto Romance Fraud
Pig butchering scams involve fraudsters developing long-term online relationships with their victims, often posing as friends or romantic interests. These scammers gradually gain the trust of their victims before introducing the idea of investing in cryptocurrency. The scammers create a facade of legitimacy, often allowing initial small withdrawals to gain further trust before locking the victims' funds and disappearing.
Guarding Against Investment Scams: Safeguarding Your Crypto Assets from Fraudulent Platforms
Investment scams similarly lure victims with promises of high returns on cryptocurrency investments. Fraudsters set up fake investment platforms and persuade victims to sign up and invest. Once the victims' identities and funds are compromised, the scammers lock the investments, making it impossible for the victims to access their money.
In 2023, Canadians reported losing $309.4 million to investment fraud, with social media-related scams accounting for $172 million of the total. These figures underline the widespread nature of these frauds and the significant financial impact on the victims.
Combatting Crypto Scams: Vigilance and Reporting Amid New Regulatory Frameworks in Canada
To combat these rising threats, the CAFC and CIRO advise citizens to be vigilant when engaging with individuals online who discuss cryptocurrency investments. They recommend reporting any suspected fraud to the CAFC, CIRO, and local law enforcement agencies. Prompt reporting can help authorities track and mitigate these scams effectively.
In addition, Canada plans to adopt the international Crypto-Asset Reporting Framework (CARF) by 2026 as part of the 2024 annual budget. This framework will introduce new reporting requirements for crypto-asset service providers (CASPs) to enhance transparency and accountability in the crypto space.
Crypto Romance Scams: A Growing Threat in North America with Links to Transnational Crime
Crypto romance scams are not just a Canadian issue; they are prevalent in the United States as well. Recent reports highlight significant financial losses, with individuals losing substantial amounts, sometimes millions, to these scams. Erin West, Deputy District Attorney in Santa Clara, California, reports receiving multiple daily emails from victims of pig butchering scams.
Moreover, stolen funds from these scams are often funneled overseas to transnational criminal organizations in Myanmar and Cambodia, where trafficked individuals are forced to carry out these scams.
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