New “pig butchering” crypto and romance scam making its rounds in Ontario

The Canadian Anti-Fraud Centre and the Canadian Investment Regulatory Organization warn Canadians about a surge in sophisticated scams, especially those involving cryptocurrency investments and romance schemes.

These elaborate scams use social manipulation and financial grooming to exploit the public’s interest in, and incomplete understanding of, crypto assets. Victims are enticed into transferring increasing amounts of money.

Typical investment frauds promise “get rich quick” opportunities and higher-than-normal returns. Unfortunately, these frauds often result in investors losing most, if not all, of their money.

On June 1, officials reported an increase in romance and investment scams, also known as “pig butchering.” In these schemes, fraudsters contact victims via dating apps or social media to develop a relationship and gain trust.

The scammer then claims success in cryptocurrency investments and offers to help the victim become wealthy. These fraudsters will use fake online trading platforms, convincing victims to transfer funds or cryptocurrency, often resulting in the victim’s inability to withdraw their funds.

Fraudsters may pose as friends, romantic partners, or legitimate investment advisers. Once a substantial amount of money is transferred, the scammer ceases contact.

When victims request their money back, fraudsters sometimes demand additional funds for supposed taxes and fees before disappearing. New entities may then approach victims, offering to help recover their funds for a fee, which is another layer of fraud.

Here are some other recent investment scams popping up:

• Fixed Income Scams: Fraudsters spoof legitimate company names, offering high returns on fake Guaranteed Investment Certificates  and bonds.
• Pump and Dump Schemes: Scammers promote low-priced stocks to inflate their value, then sell off their shares at the peak, leaving investors with worthless stocks.
• Ponzi Schemes: Early investors are paid with money from new investors, creating an illusion of high returns. The scheme collapses when there aren’t enough new investors.
• Initial Coin Offerings: Fraudulent ICOs solicit investments in fake cryptocurrencies, leading investors to lose their money.

According to the Canadian Anti-Fraud Centre main website, these are some red flags to watch out for:

• Unsolicited messages from strangers on social media, dating apps, and text messages.
• Promises of easy money in the cryptocurrency market.
• Encouragement to visit crypto-related websites with “investment packages” and “guaranteed returns.”
• Financial records showing returns or allowing small withdrawals to create false legitimacy.

With nearly $309.4 million in fraud losses reported to the CAFC in 2023, the highest on record, here are some ways residents can protect themselves:

• Be cautious of unsolicited messages and “wrong number” texts.
• Avoid investing based solely on advice from online connections.
• Consult registered financial professionals before making investments.
• Be skeptical of promises of large, quick, and low-risk returns.
• Report suspected fraud to CIRO, CAFC, and local police.

For more information and to report a suspected scam, visit the Canadian Anti-Fraud Centre website here.