Cryptocurrency scams are 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 have seen a massive increase in crypto-related frauds and scams over the past 12 to 18 months,” David Harrison, the committee’s investor education manager, told CBC Radio’s Information Morning Nova Scotia on Monday.

Harrison said a number of different scams have been reported in the county and some people have lost tens of thousands to hundreds of thousands of dollars in “a very short amount 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 the high cost of living.

One of the most common scams is the “pig slaughter” scheme.he said, in which someone contacts you out of the blue, builds a relationship with you and then convinces you that they have successfully invested in crypto.

They will then convince you to try the same thing by using money from your bank loan, credit card or line of credit. In reality, they are trying to take as much money from you as possible.

“So not only are they losing their investment, they now owe huge amounts of money on these loans that they also have to pay back one way or another,” Harrison said.

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

“Many people – especially older people – who are interested in crypto trading do not know how to do it themselves, so they try to find a professional or someone who knows how to do it for them, despite the fact that there is no registered category of people who do that in this country,” Harrison said.

“So unfortunately they make people buy crypto on our actual exchange and then transfer that crypto to their wallets, effectively taking it away from them.”

Harrison said if someone asks you to move crypto from your wallet to theirs to trade on your behalf, “that’s a big red flag”.

“Crypto transactions are fairly easy to track, but due to the security features associated with them, once they are out of your wallet and into someone else’s, it is practically impossible to recover them.

‘Industry is really bursting with fraud’

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

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

“Now the industry is unfortunately full of fraud, and I think that’s why it’s really growing. It’s a perfect opportunity for a fraudster,” said Ward.

“The cryptocurrency industry and that decentralized network is an ideal environment for a fraudster to operate in.”

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

“I would have thought it was more, and it probably is more and people are not reporting it because there is a bit of hopelessness when it comes to falling victim to crypto fraud,” she said.

She said some people may not pursue felons through court because they are hesitant to spend more money on legal fees to get their assets back.

How to protect yourself

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

He said people should be wary of online advertisements offering crypto trading services or anyone offering these services through social media – claiming they will make you money.

Ward agrees.

“If it’s too good to be true, it probably isn’t true,” she said.

Still, Ward said she doesn’t want to distract people from the industry.

“It’s really just a matter of having faith [and] do your due diligence and be careful with your money and don’t put all your eggs in one basket, if you will,” she said.

“Frankly, you have to assume that if you start putting money into it, you’re going to lose it.”

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