In 2021, Edmonton Police Service’s Cyber Crime Investigations Unit identified 87 cryptocurrency investment complaints with a monetary loss of over $5.29 million. Comparatively, in 2020, 21 occurrences with an approximate monetary loss of $270,000 were reported and 2019 saw only four occurrences with an approximate monetary loss of $84,000.
“A number of these investment scams started as an online romantic connection that progressed into cryptocurrency discussions and eventually monetary transfers,” Cyber Crime Investigations Unit Detective Dana Gehring explains. “We know online dating is extremely common, so we want to ensure Edmontonians know the signs of a potential romance investment scam and understand that dating sites and social media should not be where you find cryptocurrency investment tips.”
How the romance cryptocurrency investment scams work:
- The fraudster would “approach” the victim on a dating or social media platform. Fraudsters would claim to live in Canada, many even said they lived near the Edmonton area, but were currently out of town; a geographic separation is a common romance scam tactic. Following police investigations, any fraudsters who provided a physical address provided false locations; in one case when searched online, it was a field, another was a commercial property.
- The fraudster would move the conversation off the dating platform onto a messaging app as soon as possible. Many fraudsters would then immediately delete their dating profile.
- Throughout these relationships, conversations were only held via the text/messaging apps (no video or in-person meetings). The fraudster would start a conversation about cryptocurrency, saying they had been extremely successful in their investments and would eventually convince the victim to invest as well.
- Victims were initially directed to send their cryptocurrency to a legitimate trading platform, but after trust had been built, the scammer would direct the victim to a new investment website, which was fraudulent and controlled by the scammers.
- Many victims were directed to send personal information and identification including mailing addresses, passports, and health care ID cards to set up an account.
- Victims generally only invested small amounts of money at the beginning and were given opportunities to test how to withdraw funds. Once the victim was satisfied and felt more trusting, they would send additional funds to invest. Fraudsters would continue to show how quickly the investment increased in value so victims would send more.
- Once the victim was satisfied with their quick returns and tried to withdraw their funds, their request would be denied, their accounts would be locked until they paid several taxes and fees, or they would be told their account balance wasn’t high enough, so they’d have to invest more to take anything out. This is when victims discovered they had been scammed.
“Crypto is really trendy right now; it’s everywhere – there’s even radio ads for investing! Because it seems like everyone is talking about it, people can feel like they’re missing out and they dive in without taking the time to do the research first,” Detective Gehring continues. “We quickly trust strangers online, especially if we feel an emotional connection to them, so if that potential partner appears to be an expert and guarantees quick, high returns, it sounds perfect. That should be the first red flag – investments aren’t perfect.”
Protect yourself from scammers and research the legitimacy of the person and their cryptocurrency offer:
- Conduct online searches for the phone number and physical address they’ve given you. Is their phone number from the city they say they live in? Have you tried calling it? If so, is it in service? Does the right person answer? What comes up when you look at Google Maps with their physical address? Is it a field? Is it a commercial property?
- Call them! Have video chats. Meet them in person when you feel comfortable meeting them. But if you haven’t met them yet, do not send them personal documents or money – if you don’t trust them enough to meet in person, why trust them with your hard-earned money and personal identification?
- Do not switch from the original dating platform to another messaging app and do not switch from a legitimate investment platform to one a stranger sends you.
- Research the websites and apps associated with investments; search the name of the company plus “scam” or “complaint”.
- Just because you found an ad online or are virtually approached by an alleged investing expert does not mean it’s legitimate. Note: check your social media privacy options to see if you can opt out of targeted advertising.
- Tell your family and friends about this new personal connection. If anyone you know and trust suspects it could be a scam, listen!
- Review the information you’re sharing publicly; scammers will review your online profiles so they can use this knowledge to quickly gain your trust by having common interests, having the family you say you’re looking for, having the investment experience you’re interested in, etc.
- Know that there are NO immediate high return guarantees with a high-risk investment like cryptocurrency.
Cryptocurrency is complex. Bottom line: if you don’t understand it, don’t buy it.
More information on cryptocurrency and cryptocurrency investment scams can be found on EPS’ website.