How to spot and avoid cryptocurrency scams

Bitcoin was launched more than 15 years ago, making the crypto market a full-fledged teenager—and like any teen, it can be complicated and volatile. This market also operates outside the traditional financial system, meaning it isn't fully regulated by any central bank or government authority. While this can be part of the appeal, it's also part of the danger: the "Cryptoverse" attracts tech enthusiasts and scam artists alike. So do your homework before you invest. Learn how cryptocurrencies work and make sure you know how to protect yourself against the most common scams. and make sure you know how to protect yourself against the most common scams.

Cryptocurrency scams can target your money, your financial data or the crypto assets you already own and hold in a digital wallet. Here are some of the most frequently reported schemes. 

The key takeaway is that not all crypto assets are considered securities—unlike stocks and bonds, for example.

This directly affects how they’re launched. The fact that crypto assets are not considered securities means they’re not regulated by securities regulatory authorities. No legal intervention or authorization from regulators is required to bring crypto assets to market. That means the protections offered to investors by these regulators don’t apply.

Crypto assets can be created in minutes using online tutorials. People can create large numbers of assets at no cost and sell them to investors.

This means scammers can create investment products with minimal effort. The value of these assets is essentially speculative, and it can be easily manipulated to attract potential victims by artificially inflating demand or offering huge returns. Most crypto assets lose value immediately after they launch, once the excitement dies down.

Fraudsters often use social media to offer training or coaching programs to help you get rich quick with crypto. Some even use celebrities’ names without their permission to promote cryptocurrency. It’s a tactic designed to grab your attention and lower your guard to their fraud attempt so that they can eventually take your personal information.

In this scenario, scammers first ask you to buy cryptocurrencies or crypto assets on a legitimate trading platform. Then, once they've gained your trust, they tell you that you can earn better returns if you transfer your digital assets to a new platform. But that platform is fake. You'll keep receiving statements on how your assets are doing, but they're actually no longer in your possession—you've just handed them over to cybercriminals.   

You meet someone new on social media or a dating app. You have hobbies or interests in common, sparks fly, and your new relationship blossoms. A few days or weeks later, you start talking about money and they mention how well their investments have been doing. Your new "friend" offers to help you get the same high returns. But it's a scam—you could lose your assets on a fake crypto website or have your banking information compromised.  

If you’ve fallen victim to a crypto fraud, you can still fall prey to a new scam: websites offering to help recover what's been stolen from you. It's a ruse to collect your personal and financial information, which can be reused or sold on the dark web. You might also be charged in advance for the service—and these phony experts will disappear once your payment has been received*. 

Cybercriminals are creative and determined. As soon as one scam gets uncovered, another ten appear to take its place. Instead of trying to identify every possible scenario, you should just be vigilant and take some basic precautions.

• Unsolicited investment offers can't be trusted—especially if they come from a stranger or someone you met online.
• Celebrities and influencers aren't necessarily reliable either, so if you see them backing a crypto asset, you should take their recommendations with a grain of salt. It could be a fake—like AI-generated content—or based on misinformation. Or it might just be an attempt to attract buyers and make a profit at their expense.

• If someone offers you an investment product, make sure they're registered with the Ontario Securities Commission External link., Autorité des marchés financiers du Québec External link., or the equivalent organization for your province or territory External link..
• Check all crypto trading platforms before you use them. Don't use any platforms that haven't been registered with a provincial or territorial authority. Investing is never risk-free, but if you stick with registered platforms, you can be sure that platform itself is safe.
• Crypto launches are especially suspicious. If you want to invest, check with the authorities listed above so you can make an informed decision.  
• Canadian and provincial regulatory authorities provide a lot of useful and well-explained information on crypto assets. Make sure to consult them regularly to stay updated**.