{"id":13537,"date":"2024-03-12T15:13:37","date_gmt":"2024-03-12T15:13:37","guid":{"rendered":"https:\/\/diamondlaw.ca\/?p=13537"},"modified":"2024-03-12T15:15:35","modified_gmt":"2024-03-12T15:15:35","slug":"13537-2","status":"publish","type":"post","link":"https:\/\/diamondlaw.ca\/the-most-common-crypto-fraud-schemes-and-how-to-deal-with-them\/","title":{"rendered":"The Most Common Crypto Fraud Schemes and How To Deal With Them"},"content":{"rendered":"<p dir=\"ltr\"><span style=\"font-weight: 400;\">Since Bitcoin&#8217;s inception in 2009, crypto has seen a steady rise in following. It has expanded from a niche asset class to the mainstream, with multiple global exchanges and DeFi protocols carrying billions within their platforms. This includes holdings within hot wallets or as TVL (Total Value Locked) within DeFi. Moreover, with the successful debut of spot Bitcoin ETFs, billions more have flowed into crypto investment.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto&#8217;s journey, however, has been far from a smooth one. Like any new asset or investment opportunity, it began like the Wild West. Naturally, fraudsters and scammers were quick to take advantage. Fraud, scams, and illegal transactions have frequented the headlines, starting with Mt. Gox, the infamous Bitcoin bankruptcy scandal that cost many of its early investors their coins.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Dark web marketplaces also contributed to Bitcoin and crypto&#8217;s early notoriety. During the 2017 bull run, ICOs dominated the market. Many such ICO projects were outright scams, and many lost their investments in phantom tokens. Recently, scandals like the Terra-Luna collapse and the FTX debacle added devastating losses to the list.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Canadians lost over $161 million to investment scams in the first six months of 2023, most of which were attributed to cryptocurrency. The figure came from a <\/span><a href=\"https:\/\/www.ctvnews.ca\/business\/it-seemed-like-fast-easy-money-by-the-time-he-realized-it-was-a-scam-it-was-too-late-1.6607759\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Canadian Anti-Fraud Centre<\/span><\/a><span style=\"font-weight: 400;\"> (CAFC) report.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Here, we discuss the common types of fraudulent transactions and scams in the crypto world. We will delve into their mechanics and how to avoid them. Equipped with knowledge of fraudulent practices and their real-world examples, you can be more discerning about where you invest your money.&nbsp;<\/span><\/p>\n<div dir=\"ltr\" align=\"left\">\n<table>\n<colgroup>\n<col width=\"624\"><\/colgroup>\n<tbody>\n<tr>\n<td>\n<p dir=\"ltr\"><b>Key Takeaways<\/b><\/p>\n<ul>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Crypto scams and cryptocurrency fraud schemes mimic fraudulent activities in traditional financial markets.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The most common scams include crypto Ponzi schemes, pump-and-dumps or rug pulls, blackmail and extortion, phishing and malware attacks, exchange hacks, exit scams, and ICO scams.&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Once you recognize you\u2019ve been scammed, contact banks and credit agencies to put alerts on your accounts and file a report with the police.<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h2 dir=\"ltr\"><b>What are the most common crypto scams?<\/b><\/h2>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Remember that the nature of fraud and scams in crypto follows age-old models and patterns. If you understand the history of financial markets, nothing is new under the sun.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto is simply a digital homolog of existing financial concepts. It can be digital money or a tokenized representation of an asset. It can also perform traditional functions of assets or currency, such as being a reliable store of value, an accepted medium of exchange, and a unit of account. Therefore, scams that are possible with government-issued cash or fiat can be translated to the crypto world.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Are all cryptocurrencies and their transactions fraudulent? International data shows it\u2019s far from it and on a downtrend. A <\/span><a href=\"https:\/\/www.chainalysis.com\/blog\/2024-crypto-crime-report-introduction\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">recent crypto crime report by Chainalysis<\/span><\/a><span style=\"font-weight: 400;\"> noted a significant drop in value received by identified illicit crypto addresses. The number dropped from $39.6 billion in 2022 to $24.2 billion in 2023.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Aside from the reduction in the absolute value of criminal activity globally, Chainalysis&#8217; estimate for illicit transactions&#8217; share of all crypto transaction volume also dropped. It decreased from 0.42 percent in 2022&nbsp; to 0.34 percent in 2023.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">It is promising to note that the growth of legitimate cryptocurrency usage is far outpacing the growth of criminal usage. Nonetheless, users should be wary of various schemes and tactics to steal money. Here are some of them:&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>Crypto Ponzi schemes<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The term \u201c<\/span><a href=\"https:\/\/www.investopedia.com\/terms\/p\/ponzischeme.asp#:~:text=The%20term%20%22Ponzi%20Scheme%22%20was,Howe%20in%20the%20United%20States.\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Ponzi Scheme<\/span><\/a><span style=\"font-weight: 400;\">&#8221; originated from the swindler Charles Ponzi and his activities from 1919 to the 1920s. Ponzi&#8217;s infamous scheme involved the United States Postal Service. At the time, the US Postal Service developed international reply coupons that allowed senders to pre-purchase postage, including it in their correspondence. Receivers could take the coupon to their local post office and exchange it for priority airmail postage stamps to send their reply letters.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Ponzi conducted arbitrage under this type of exchange, which isn&#8217;t illegal. However, he took it a step further. Under his company, the Securities Exchange Company, he promised his investors high returns under the postage stamp scheme\u201450 percent in 45 days or 100 percent in 90 days.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The offer was too good to be true, but investors latched on to it. Ponzi didn&#8217;t reinvest the money. He used the new investments to pay previous investors\u2014essentially redistributing the money and passing it for returns. Ponzi was investigated and subsequently arrested for mail fraud.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">In the realm of crypto, this old form of financial fraud has been translated into cryptocurrency token projects or investment schemes promising high returns by using the same tactic: funnelling funds from new investors to pay existing ones.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto Ponzis masquerades as &#8220;high-yield&#8221; programs offering unnaturally high ROIs for your fiat money or Bitcoin investment. They present themselves as legitimate opportunities with enthusiastic and well-spoken ambassadors who are ever-present in social media, well-financed campaigns, and investor gatherings.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Examples of crypto Ponzi include PlusToken and BitConnect. The two were massive global Ponzi operations, luring unsuspecting investors by promising returns unattainable through regular crypto trading and traditional investments. At some point, BitConnect reached a peak market cap of $3.4 billion. Both projects collapsed. BitConnect\u2019s founder was <\/span><a href=\"https:\/\/www.justice.gov\/opa\/pr\/bitconnect-founder-indicted-global-24-billion-cryptocurrency-scheme\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">charged with orchestrating a global Ponzi scheme<\/span><\/a><span style=\"font-weight: 400;\"> by a federal grand jury in San Diego, US.&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>Pump-and-dump schemes or &#8220;rug pulls&#8221;<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">In a typical pump-and-dump scheme, also known as a rug pull, frauds spread misleading or false information to trigger a buying frenzy that inflates or &#8220;pumps&#8221; the value of a coin. Manipulators artificially inflate the price of a chosen cryptocurrency or token and sell their holdings at a profit once the unsuspecting investors buy in.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">When the <\/span><a href=\"https:\/\/www.moneysense.ca\/save\/investing\/crypto\/common-crypto-scams\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">manipulators \u201cdump\u201d their coins or tokens<\/span><\/a><span style=\"font-weight: 400;\">, it usually causes a panic as they sell in large volumes. As the panic spreads, the coin or token&#8217;s value plunges. The promoters make easy money, and numerous small investors end up &#8220;holding the bag,&#8221; left with huge losses and no one to sell to.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">These schemes typically happen with the aid of aggressive &#8220;shills&#8221; or promoters and social media threads. They are executed in crypto exchanges worldwide, usually the less reputable ones. Manipulators use social media communities to spread the word, using platforms like Discord and Telegram to foster enthusiastic discussions.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The practice also happens in traditional financial markets. Pump-and-dumps have existed on Wall Street since the beginning. A well-known example of this scam in traditional markets is the pump-and-dump on penny stocks by Jordan Belfort and his company in the early 2000s, as popularized in the film <\/span><i><span style=\"font-weight: 400;\">The Wolf of Wall Street.<\/span><\/i><\/p>\n<h3 dir=\"ltr\"><b>Blackmail and extortion scams<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Some scammers will claim to have sensitive or embarrassing personal information like scandalous photos or videos to scare you into paying them, luring you into a trap. Many threaten to release the information publicly but promise to hold off if you give in to their demands. The wording of the demands is similar: the problem will disappear if you transfer crypto to them as soon as possible.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">In some cases, the claims are false; in others, the scammers may have gained access to your personal or business documents. Governments recommend reporting extortion or blackmail scams to the appropriate authorities immediately. In addition, experts advise against sending any money and avoiding communication or negotiation with the thieves.<\/span><\/p>\n<h3 dir=\"ltr\"><b>Phishing and malware attacks<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Cybercriminals use malware to gain access to your information or system. <\/span><a href=\"https:\/\/nordvpn.com\/blog\/crypto-malware\/#:~:text=Crypto%20malware%20is%20a%20type,and%20have%20never%20used%20cryptocurrency.\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Crypto malware<\/span><\/a><span style=\"font-weight: 400;\"> is a kind of malware that carries out crypto-jacking attacks. These attacks absorb all the resources from a victim&#8217;s computer to mine cryptocurrency.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">You don&#8217;t need to own cryptocurrency or have a crypto wallet to be a victim of this scheme. Crypto mining doesn&#8217;t usually include stealing funds from a victim&#8217;s crypto wallet. The hackers only need your device to mine. <\/span><\/p>\n<p dir=\"ltr\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2.jpg\" alt=\"\" width=\"1920\" height=\"1324\" class=\"alignnone size-full wp-image-13539\" srcset=\"https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2.jpg 1920w, https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2-300x207.jpg 300w, https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2-1024x706.jpg 1024w, https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2-768x530.jpg 768w, https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2-1536x1059.jpg 1536w, https:\/\/diamondlaw.ca\/wp-content\/uploads\/sites\/8\/2024\/03\/crypto-fraud2-1568x1081.jpg 1568w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\" \/><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Phishing scams involve fraudsters or hackers pretending to be someone else. They can represent a company, adding credibility to their persona. Their goal is to get you to share private information willingly.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto phishing scams may ask you to share your private keys\u2014the critical alphanumeric keys needed to access your wallet. They may send an official-looking email with a company&#8217;s logo and name, asking you to log in and provide vital information as a way to gain access to your assets or accounts.&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>Exit scams and exchange hacks<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">There are many types of crypto exchanges, and their technology has evolved and improved over the years, especially in security measures. Even with these advancements, however, crypto exchanges remain vulnerable to hacks, just like any exchange holding significant assets.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Outside parties orchestrate many attacks. However, you don&#8217;t need to look too far in other cases. Exchange operators can execute exit scams, leaving with users&#8217; funds in the guise of a security breach or some other emergency incident, like a fake death.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">One of the most notorious alleged exit scams in crypto history was that of Canadian exchange QuadrigaCX, involving its founder Gerald Cotten. News of Cotten\u2019s death alarmed customers with funds held in the exchange.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The initial disclosure from the exchange in 2019 reported that its founder died of Crohn\u2019s disease complications. The incident cut off access to QuadrigaCX\u2019s cold wallets with $145 million in customer-owned tokens. Exchange withdrawals were subsequently frozen. The firm entered bankruptcy shortly after.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Further investigation into the incident found that it was both an exit scam and a founder&#8217;s death.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">During his time at the company&#8217;s helm, Cotten used fake accounts on the exchange to purchase Bitcoin from his customers using fictitious Canadian dollars, <\/span><a href=\"https:\/\/www.coindesk.com\/markets\/2021\/06\/29\/gerald-cotten-and-quadriga-unraveling-cryptos-biggest-mystery\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">according to the auditor Ernst &amp; Young<\/span><\/a><span style=\"font-weight: 400;\">. The stolen Bitcoin was then moved to other exchanges to take risky bets. Moreover, the exchange founder was found to have a track record of theft and deception dating back to his teenage years.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The Mt. Gox collapse in 2014 marked the earliest crypto exchange disaster in history. It is a stark reminder of the dangers of leaving funds in centralized platforms.&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>ICO Scams<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">ICO stands for Initial Coin Offering. Patterned after IPOs or Initial Public Offerings, ICOs aimed to replicate the stock market dynamics by using coins instead of stocks. ICOs are fundraising methods used by crypto startups.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">These startups issue digital tokens, equivalent to a stock, in an unregulated market. The scams usually involve false promises of earnings and ecosystems providing benefits and value like <\/span><a href=\"https:\/\/diamondlaw.ca\/3-types-of-product-liability-claims\/\"><span style=\"font-weight: 400;\">nonexistent products<\/span><\/a><span style=\"font-weight: 400;\"> and services.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Investors expect their tokens to appreciate and thus buy them at an apparent discounted price. &#8220;Private sales&#8221; claim to offer even more privileges to early investors, as they are deemed more exclusive and precede the actual exchange-based ICO.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The <\/span><a href=\"https:\/\/www.linkedin.com\/pulse\/detailed-exploration-2017-bull-run-including-price-dynamics-market-8apgc\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">crypto bull run of 2017<\/span><\/a><span style=\"font-weight: 400;\"> coincided with the ICO boom. Thousands of projects flooded the crypto space. Each project had its whitepapers, many of which were plagiarized or filled with unrealistic figures and promises. Since the ICO boom, regulators have caught up.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Some jurisdictions have labelled company-issued crypto tokens as securities and investigated ICO projects or banned the sale of tokens altogether. Several celebrity ICO endorsers were charged with unlawfully touting coin offerings. <\/span><span style=\"font-weight: 400;\"><span> <\/span><\/span><span style=\"font-weight: 400;\"><span> <\/span><\/span><span style=\"font-weight: 400;\"><span> <\/span><\/span><span style=\"font-weight: 400;\"><span> <\/span><\/span><\/p>\n<h2 dir=\"ltr\"><b>How To Avoid a Crypto Scam<\/b><\/h2>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto scams operate on age-old deception tactics packaged in a new technology wrapper. The following are <\/span><a href=\"https:\/\/time.com\/personal-finance\/article\/popular-crypto-scams\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">ways to catch on quickly<\/span><\/a><span style=\"font-weight: 400;\"> to a crypto fraud scheme and thus avoid it:<\/span><\/p>\n<h3 dir=\"ltr\"><b>Don\u2019t fall for promises of guaranteed returns<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto markets are incredibly volatile, making it impossible to guarantee a specified rate of return. Projects that are ultra-confident about their fixed returns should immediately be held suspect.&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>If it\u2019s too good to be true, it is<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">New, untested crypto projects tend to promise the moon. The most enduring crypto projects involve considerable time, effort, and investment and always come with a warning. A little research about a project&#8217;s reputation, team or founders, traction, and output protects your investment. Be cautious of big claims that are unbacked by data.<\/span><\/p>\n<h3 dir=\"ltr\"><b>Be wary of invasive or unexpected communications<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Ignore unexpected or unknown emails, phone calls, or texts from people urging you to log into an account, access a business opportunity, join a group, or send crypto to resolve an issue.&nbsp;<\/span><\/p>\n<h3 dir=\"ltr\"><b>Resist pay-to-play opportunities<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto is full of pay-to-play offers asking you for a fee to generate publicity, win awards, get a job, or secure a position in the industry. No one competent enough should have to pay for a place in the industry. If you encounter these types of schemes, run.&nbsp;<\/span><\/p>\n<h2 dir=\"ltr\"><b>Learn To Spot Red Flags Early<\/b><\/h2>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">In crypto, there&#8217;s a common expression called DYOR\u2014an acronym for &#8220;do your own research.&#8221; Even if crypto is full of retail investors and decentralized projects, traders and investors should be highly cautious of <\/span><a href=\"https:\/\/diamondlaw.ca\/real-estate\/mortgage-fraud-a-real-estate-lawyers-guide\/\"><span style=\"font-weight: 400;\">fraudulent transactions<\/span><\/a><span style=\"font-weight: 400;\"> and get-rich-quick schemes.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Due diligence is paramount. Remember that many crypto scams are simply mirrors of old psychological tricks and financial deceptions. With time, you can develop the skills to catch these typical red flags early.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">When deciding whether to invest in a coin or project, read the whitepaper, use educational resources, stay abreast of news, check the project&#8217;s reputation and history, review the currency or token&#8217;s performance, and ask or consult experienced investors. Professional investors will likely provide invaluable advice and insight on navigating the volatile crypto markets.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Once lost, it could be tough to get your money back. Nonetheless, cryptocurrency is not a black hole, and regulators have developed ways to trace illegal transactions on the blockchain. There may still be a way to recover your funds. You could join a <\/span><a href=\"https:\/\/diamondlaw.ca\/class-action-litigation\/\"><span style=\"font-weight: 400;\">class-action lawsuit<\/span><\/a><span style=\"font-weight: 400;\">. Nevertheless, you must inform the government about unscrupulous practices to prevent them from happening again.&nbsp;<\/span><\/p>\n<div dir=\"ltr\" align=\"left\">\n<table>\n<colgroup>\n<col width=\"632\"><\/colgroup>\n<tbody>\n<tr>\n<td>\n<h3 dir=\"ltr\"><b><i>Pro Tip<\/i><\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">You can <\/span><a href=\"https:\/\/www.cbc.ca\/news\/canada\/toronto\/crypto-scam-victim-money-back-1.7049577\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">take the following steps<\/span><\/a><span style=\"font-weight: 400;\"> once you\u2019ve recognized you\u2019ve been scammed:<\/span><\/p>\n<ul>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Contact your financial institution or bank and ask them to stop any ongoing payments.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">File a report with the Canadian police.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ask your bank to put fraud alerts on your accounts.&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Contact Canada&#8217;s leading credit agencies, Equifax and TransUnion, to place fraud alerts on your accounts.&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Do not trust private companies claiming they can get your money back. <\/span><i><span style=\"font-weight: 400;\">&nbsp;<\/span><\/i><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p dir=\"ltr\"><b>Seek Legal Help From Diamond and Diamond Lawyers<\/b><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto scams make up over half of financial fraud incidents in Canada. The legal landscape around crypto is still evolving; however, greater certainty has been emerging in recent years. While retrieving your funds can be challenging, it is not impossible. Government agencies have gained expertise in tracing blockchain transactions and penalizing financial fraud.<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">It is important to document your experience for future reference. Thus, you need to ensure proper reporting with the police, financial institutions, and credit agencies, with a law firm to guide you along the way.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">It is also crucial to obtain proper legal guidance from a reliable law firm when engaging in crypto-related investments. It\u2019s equally important when dealing with potential fraud. A lawyer with experience in handling financial fraud can help you evaluate financial contracts and pursue legal action against scammers. <\/span><a href=\"https:\/\/diamondlaw.ca\/real-estate\/\"><span style=\"font-weight: 400;\">Contact us today<\/span><\/a><span style=\"font-weight: 400;\"> for further assistance with your financial matters.&nbsp;<\/span><\/p>\n<h4 dir=\"ltr\"><b><i>Secure your financial future and peace of mind. Navigate potential crypto scams with Diamond and Diamond Law.&nbsp;<\/i><\/b><\/h4>\n<h2 dir=\"ltr\"><b>FAQs on Cryptocurrency Fraud<\/b><\/h2>\n<h3 dir=\"ltr\"><b>What signs of financial or crypto fraud should I watch for online?<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Crypto fraudsters use the internet and social media to proliferate their scams. They typically <\/span><a href=\"https:\/\/www.getsmarteraboutmoney.ca\/learning-path\/types-of-fraud\/red-flags-of-crypto-fraud\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">use the following tactics<\/span><\/a><span style=\"font-weight: 400;\"> to convince you to part with your money online:&nbsp;<\/span><\/p>\n<ul>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">High-pressure sales tactics: they act pushy, forcing you to act ASAP or miss out on the opportunity.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Asking you to download a Trojan horse: one of the requirements to invest is to download an app that gives access to your computer.&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Deceptive good looks: many crypto promoters could be professionals, celebrities or paid \u201cshills.\u201d Look beyond a website\u2019s slick design and claims of celebrity endorsement.&nbsp;&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">No trading experience needed: many claim you don\u2019t need specialized knowledge or trading experience to be successful in crypto investing. They might tell you everything\u2019s automated, so you don\u2019t need to do anything but watch your investment grow.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Pay more to get less: some scams ask you to deposit more money to withdraw from your account.&nbsp;<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unreachable for inquiries: the fraudsters become unavailable once you make a withdrawal request or have further questions.<\/span><\/li>\n<\/ul>\n<h3 dir=\"ltr\"><b>How do you know a crypto platform is legit in Canada?<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">There are ways to check whether a company engaging in crypto assets trading or advice in Canada is legit:<\/span><\/p>\n<ul>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Check whether the individual, company, or entity is registered with their respective territorial or regional securities regulatory authority.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Find out if the company has a history of crypto litigation or has faced disciplinary action.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Verify the company through the <\/span><a href=\"https:\/\/info.securities-administrators.ca\/nrsmobile\/nrssearch.aspx\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">National Registration Search<\/span><\/a><span style=\"font-weight: 400;\"> tool.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Check investor alerts from the <\/span><a href=\"https:\/\/www.securities-administrators.ca\/investor-alerts\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">Canadian Securities Administrators<\/span><\/a><span style=\"font-weight: 400;\"> site.<\/span><\/li>\n<li dir=\"ltr\" style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Check <\/span><a href=\"https:\/\/www.securities-administrators.ca\/crypto-trading-platforms-regulation-and-enforcement-actions\/\" rel=\"nofollow noopener\" target=\"_blank\"><span style=\"font-weight: 400;\">authorized crypto asset trading platforms<\/span><\/a><span style=\"font-weight: 400;\"> on the Canadian Securities Administrators\u2019 list.&nbsp;<\/span><\/li>\n<\/ul>\n<h3 dir=\"ltr\"><b>Why hire a lawyer to advise you on crypto fraud?&nbsp;<\/b><\/h3>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">The majority of fraudulent deals and transactions in Canada are now perpetuated in the world of crypto. Many who fall prey to such scams are typically less informed about crypto as a digital asset and technology and are unaware of the laws governing it.&nbsp;<\/span><\/p>\n<p dir=\"ltr\"><span style=\"font-weight: 400;\">Nonetheless, investing in crypto can present a growth opportunity if you screen and choose your investments properly. Checking with a lawyer can help you detect scams early. Lawyers can also advise you on matters of registration, reporting, and taxation on your investments. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Since Bitcoin&#8217;s inception in 2009, crypto has seen a steady rise in following. It has expanded from a niche asset class to the mainstream, with multiple global exchanges and DeFi protocols carrying billions within their platforms. This includes holdings within hot wallets or as TVL (Total Value Locked) within DeFi. Moreover, with the successful debut&hellip;<\/p>\n","protected":false},"author":1,"featured_media":13538,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"ngg_post_thumbnail":0,"footnotes":""},"categories":[1106],"tags":[],"class_list":["post-13537","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fraud","entry"],"_links":{"self":[{"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/posts\/13537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/comments?post=13537"}],"version-history":[{"count":0,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/posts\/13537\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/media\/13538"}],"wp:attachment":[{"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/media?parent=13537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/categories?post=13537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/diamondlaw.ca\/wp-json\/wp\/v2\/tags?post=13537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}