At Meridian, we’re committed to helping every Member live their best life. Part of our commitment involves keeping you informed about potential risks and scams, while providing you with access to support. Learning about Cryptocurrency-related Investment Scams and recognizing the signs and tactics of this fraud can help protect you and your loved ones.
What is Cryptocurrency?
Cryptocurrency, sometimes called “crypto”, is a system that completes transactions in a decentralized ledger (known as a “blockchain”), which only exists digitally. Users maintain the blockchain and are rewarded with tokens (known as “coins”). This maintenance process is known as “mining”. Coins can sometimes be accepted as a medium of exchange and used as currency. Because the relative price of cryptocurrency can be volatile and the value of the currencies can change quickly, it can sometimes be used as a vehicle for speculation or investment.
What is a Cryptocurrency-related Investment Scam?
Cryptocurrency Investment Scams involve fraudsters convincing victims to invest in “too good to be true” opportunities that are false, deceptive, and/or misleading. Typically, individuals will be told they can invest a sum of money, which will be converted to cryptocurrency (e.g. Bitcoin, Ethereum, etc.), so that it can later be converted back into regular currency (e.g. Canadian Dollars) at a much higher value. The request for funds can be done in many ways, but common tactics include the use of Bitcoin Automated Banking Machines (“ABMs”), wire transfers, or even sending a courier to pick up cash directly from the victim. Once funds are provided to the fraudster, they are stolen and not recoverable.
Victims may be introduced to these scams via online advertisements in social media (e.g. Instagram, Facebook, TikTok, etc.) and/or online dating platforms. In some instances, fraudsters may impersonate representatives of a legitimate business or organization via phone calls, emails, social media, text messages, other forms of instant messaging, or even physical mail. In a variation, threat actors use stolen social media credentials to target friends/family of the individual whose credentials were stolen.
Once a victim is contacted, fraudsters may provide websites designed to look like an online trading platform that appear to show high returns to influence individuals to “invest” additional money. Victims may even be allowed to make a small withdrawal to help build a sense of legitimacy. If an individual tries to make a significant withdrawal, stops “investing” more money, or becomes aware of the scam, fraudsters will typically end all contact.
How to Spot a Cryptocurrency-related Investment Scam
- Promotions often feature a limited or one-time opportunity. This is done to create a sense of urgency, to convince victims to act quickly.
- Guarantees of a lucrative return on a small initial “investment.” Occasionally, the victim might be able to withdraw a small amount of their "investment" but are then coerced into sending more funds.
- Videos by figures of influence (e.g. Elon Musk, Mark Zuckerberg, Rob Ford, Justin Trudeau, etc.) posted on YouTube or other platforms. These are often deepfake videos created with Artificial Intelligence (AI) technology.
- Unsolicited phone calls from unknown and/or unfamiliar numbers. Fraudsters may make threats and/or employ high pressure tactics to influence you to keep information secret from your friends, family, and financial institution.
- Unsolicited investment opportunities, even from friends and family.
- Reference to suspicious websites, which may be used by scammers to show fake account balances or investment returns to victims.
- Instructions given to victims by third parties via Zoom meetings, phone calls, or other forms of communication, to open cryptocurrency accounts on trading platforms.
- Victims may be instructed to wire funds to digital currency exchanges or purchase cryptocurrency from a legitimate cryptocurrency exchange, then transfer it to a cryptocurrency address controlled by the fraudster.
- Victims are often coached by the scammers to provide Meridian with a different purpose for the transactions and withdrawals, to help avoid suspicion.
Protect yourself with these steps
- Use good judgement. If an offer sounds too good to be true, it usually is. Obtain advice from your support network, your family, or your financial institution.
- Do your research. Take the time to research the opportunity, the advisor, and/or the company. Check if the advisor is officially registered with any regulators or administrators.
- The Canadian Securities Administrators (CSA) is the umbrella organization of Canada’s provincial and territorial securities regulators. They provide additional information and resources can be found on their website: Check Before You Invest.
- Resist pressure to act quickly or to send funds as instructed by an individual. Discuss this incident/request with loved ones, your branch (by providing complete and truthful information), and/or legitimate law enforcement to obtain their opinion and support.
- Familiarize yourself with scam trends and how they work. A list of known scams can be found at the Canadian Anti-Fraud Centre. Other reputable sources include the Royal Canadian Mounted Police, the Canadian Bankers Association, or the Competition Bureau’s Little Black Book of Scams.
If you encounter a scam, or believe you have been the victim of fraud, Meridian recommends that you:
- Report the incident to your local police immediately
- Talk to our Fraud Team at 1-866-592-2226
- Report the incident to the Canadian Anti-Fraud Centre
Legal Notice and Disclaimer of Liability
Information provided by Meridian Credit Union Ltd. in this article is for informational purposes only, and we cannot guarantee it is accurate or complete or current at all times. This information is not intended to provide financial or legal advice and should not be relied upon in that regard.
