Empty Promises: Romance Scams, Crypto and Getting Rich Quick

Canadians should be aware of the threat of sophisticated scams involving prolonged communications and relationships built through social media, dating apps and websites, and through text messages.

A joint news release from the Canadian Anti-Fraud Centre (CAFC) and the Canadian Investment Regulatory Organization (CIRO) outlines how these scammers exploit popular interest in cryptocurrency.

According to the CAFC, there has been an increase in romance scams. These scammers prey on individuals seeking human connection online. In these scams, victims are contacted on dating apps and websites or via social media. Fraudsters befriend their future victims, build a relationship to gain trust and sometimes even develop an online romance.

Eventually, the scammers share their own success with crypto investment and offer to help their “friend” get rich. Promising outsized returns, with little or no risk, fraudsters lure victims into a “get rich quick” scheme, getting them to transfer money to fake online trading platforms, often resulting in the victim being unable to withdraw funds. Once a substantial amount of money or crypto has been sent, the scammer abruptly ceases contact.

In some cases—in a further layer of the scam—the scammer agrees to return the funds but demands additional funds for supposed taxes and fees before then disappearing. Victims are sometimes also approached by new entities offering to help recover the lost funds for a fee. These recovery scams are yet another level of sophistication to these scams—preying on victims at a vulnerable time as they try to recover the initial losses.

In recent years, cryptocurrency and non-fungible tokens (NFTs) have captured the imaginations of innocent and knowing investors alike. These innovations may present new opportunities for investors, however, there are no crypto platforms recognized as an exchange in Canada and none are authorized to operate as a marketplace or dealer in this country. Canadians should therefore be cautious when buying crypto assets.

CIRO along with regulators like the Canadian Securities Administrators (CSA) and the International Organization of Securities Commissions (IOSCO) continue to collaborate on the best approach to this new asset class.