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8. Investment recovery pitch scams
Investment recovery pitch scams target people already victimized by fraud, preying on their desperation. According to the CAFC, these scams are on the rise.
Here’s how they work: Scammers contact victims by phone, email or social media and offer to help them recover their money. Once the scammers have won the victims’ trust, they ask for a fee for their “recovery services.” They may even ask for remote access to the victim’s computer—and online bank account, perhaps leading to further losses.
9. Celebrity impersonation
Was that really Reese Witherspoon touting NFTs? Can you really buy virtual property near Snoop’s? Trend-jacking off these real endorsements is a slew of faux celebrity crypto endorsements—including sophisticated deepfake videos and ads. A common concern around crypto investing is whether a coin or a project is genuine and trustworthy—but if your favourite actor or influencer is on board, it’s probably fine, right?
For marketers, exploiting the popularity and credibility of celebrities is a time-tested way to feign authenticity and garner trust. But things may not always be what they seem. Scammers create fake social media content or manipulate existing content to make it appear as though celebrities endorse a particular cryptocurrency. They tend to use faces already prominent in the crypto space—such as Tesla CEO Elon Musk or Ethereum founder Vitalik Buterin—to draw investors in.
Also beware of fake influencers: people who create social media accounts, buy followers and pretend to be influencers in order to peddle specific coins, crypto products or services. Scammers also use fake comments to make it appear that social media users recommend their services.
10. Blackmail scams
Blackmail scams are among the most disturbing crypto schemes. Scammers issue threats, often claiming they have access to a victim’s internet browsing history, passwords or an embarrassing webcam recording. They demand that the victim transfer crypto to their wallet address to make the problem go away. Or, the demand may be for the victim to promote a particular crypto to their contacts. While these experiences can be harrowing for victims, it is important not to respond to blackmailers.
How to protect yourself from crypto scams
Unfortunately, at least for now, scams are rampant in the crypto ecosystem. Here’s what you can do to avoid being trapped.
Be skeptical: Anyone can be a target, even experienced crypto traders, so it’s best to maintain a healthy dose of skepticism whenever a crypto “opportunity”—or any other investment offer—comes your way.
Verify all links: Don’t click on a link without examining it carefully to make sure it’s from a trusted and verified source. You can inspect shortened URLs using a link-expansion service, which will verify an email ID directly with the institution it’s supposedly sent from, or using a URL decoding tool to find out a link’s real destination.
Don’t send crypto to unknown wallets: If you’re transferring crypto to a wallet that’s not yours, make sure you know and trust the person or company it belongs to. A con artist trying to pull a 2-for-1 scam, for example, might send you a wallet address. Never send crypto to a wallet you can’t verify, no matter how good the deal sounds.
Use official support channels: Don’t trust anyone who reaches out to you in the guise of a support representative on social media platforms or community messaging platforms.
Do your research: When choosing a crypto trading platform or a mining or staking service provider, stick with trusted names and companies with a clearly visible public footprint.
Never disclose confidential information: Don’t share your passwords, private keys or seed phrases with anybody under any circumstances.
Don’t respond to blackmail: If someone attempts to blackmail you, the best way to protect yourself is not to respond at all. Instead, report the scam to the CAFC.
How to report a scam
If you think you may be a victim of a crypto scam or other financial fraud, contact your bank to stop payment of any money transfers or cheques, then report the scam to the police and the CAFC—online or by phone. If you don’t report, authorities can’t investigate, and we won’t understand the extent and nature of crypto fraud in Canada.
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