Cryptocurrency scams on the rise in Nova Scotia

The Nova Scotia Securities Commission is warning people to be careful with their money and understand what they're getting into after Nova Scotians lost more than $1 million to cryptocurrency scams since the fall.

"We've seen a tremendous increase in crypto-related frauds and scams over the last 12 to 18 months," David Harrison, the commission's investor education manager, told CBC Radio's Information Morning Nova Scotia on Monday.

Harrison said there have been a number of different scams reported in the province, and some people have lost tens of thousands to hundreds of thousands of dollars over "very short periods of time."

He said these particular scams are on the rise in Nova Scotia as people turn to cryptocurrency as a second source of income to help with high costs of living.

One of the more common scams is the "pig butchering" scheme, he said, in which someone contacts you out of the blue, builds a relationship with you and then convinces you they have successfully invested in crypto.

They will then convince you to attempt to do the same by using money from your bank loan, credit card or line of credit. In actuality, they're aiming to take as much money from you as possible.

"So not only are they losing their investment, they now owe tremendous amounts of money to these loans that they have to pay back someway as well," Harrison said.

There are also schemes that encourage people to buy crypto and then hire someone to do the trading for them.

"A lot of people older people especially that are interested in crypto trading, don't know how to do it themselves, so they're trying to find a professional or someone that knows how to do it for them, despite the fact there's no registered category of people that do that in this country," Harrison said.

"So unfortunately, they're getting people to buy crypto on our actual exchange and then transfer that crypto to their wallet, effectively taking it away from them."

Harrison said if someone is asking you to move crypto from your wallet to theirs to trade on your behalf,"that's a major red flag."

"Crypto transactions are fairly easy to trace, but due to the security features involved with them, once it's out of your wallet and in someone else's, it's practically impossible to reclaim it," he said.

'Industry is really rife with fraud'

Maureen Ward, a partner and co-head of the fraud law practice at Bennett Jones in Toronto, said these cryptocurrencyscams are on the rise across Canada.

She said people are often enticed by cryptocurrency because there are real stories of people making millions from it but the industry is changing.

"Now the industry is really rife with fraud, sadly, and I think that's really why it's growing. It's a perfect opportunity for a fraudster," Ward said.

"The cryptocurrency industry and that decentralized network is an ideal environment within which a fraudster can operate."

She said she's not surprised by the loss in Nova Scotia.

"I would have thought it was more, and it probably is more and people aren't reporting it because there's a bit of hopelessness when it comes to being a victim of crypto fraud," she said.

She said some people may not pursue criminals through the courtsbecause they're hesitant to spend more money legal fees to recover their assets.

How to protect yourself

Harrison said Canada has implemented new security laws that require crypto trading services to be registered. These registered services can be found on the Nova Scotia Securities Commission website.

He said people should be careful of any online ads that offer crypto trading services or anyone who offers these services through social media claiming they will make you money.

Ward agrees.

"If it's too good to be true, it is likely not true," she said.

Still, Ward said she doesn't want to sway people from the industry.

"It's just really a matter of having a level of confidence [and] doing your due diligence and being careful with your money and not sort of putting all your eggs in one basket, if you will," she said.

"You have to assume you're going to lose it, frankly, if you're going to put money into it."

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