It is trying times for cryptocurrency investors as incidents of crypto scams appear to be on the rise. The lure of Bitcoin, Ethereum, Cardano and others has done much to boost the demand for digital currencies but with devastating consequences for some Canadians.
Recently, two Ontario women reported having lost substantial amounts through such investments. One lady confirmed having met someone on social media that encouraged her to try investing in cryptocurrencies. After recording high growth with the initial investment of a few thousand dollars, the woman sunk in more money, including savings, her RRSP, and borrowings from friends that amounted to about $24,000. Upon trying to later withdraw money, she was suddenly informed she needed to pay $5,000 tax for withdrawals and an additional $5,000 in miner’s tax. The account was eventually frozen and she can no longer access her money.
The other woman also found herself investing in cryptocurrencies after a recommendation from someone she met on a dating website. After investments reached a worth of over $100,000, she attempted to withdraw and was informed she needed to pay certain taxes and fees. She is now unable to recover the $80,000 she invested.
Her experience echoes that of a Montreal man that also went into cryptocurrency investments upon the recommendation of a woman he was in an online romantic relationship with from China. She advised him to go into bitcoin mining through a certain site. He eventually wound up investing all his life savings totalling about $390,000. When he tried to withdraw his monies following a crackdown on cryptocurrency operations by the Chinese government, he was notified that he needed to pay a 15% tax amounting to around $192,000 upfront. The victims are now grappling with the grim reality that they may never see their monies again.
Cryptocurrency expert, David Khalif of Viridi Funds, has advised against making investments based on recommendations from people met on social media that could be anyone in the world. He warned against any deals that seemed too good to be true. He advised investors to do their due diligence and deal only with trustworthy exchanges as any money sent out on the blockchain would be impossible to get back.
The Royal Canadian Mounted Police (RCMP) confirmed in March that cryptocurrency fraud increased by about 400% between 2017 and 2020. An estimated $77 million was reportedly lost through digital currency scams during the first eight months of 2020. Due to the strong encryption of cryptocurrencies, fraudsters were afforded protection and anonymity from their victims, hampering efforts to identify and prosecute them. Earlier this month, the RCMP put out an advisory on how members of the public could help protect themselves from cybercrime and telephone scams.
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