I’ve been tracking the dark side of Canada’s cryptocurrency boom since 2021, and what I’m seeing in 2024 is deeply troubling. Last Tuesday, I sat across from Michael Chen in a Montreal coffee shop, watching his hands shake as he described losing $87,000 to what he believed was a legitimate cryptocurrency investment platform.
“They had professional videos, testimonials, even customer service that responded immediately,” Chen told me. “Then one day, I tried to withdraw my earnings and everything disappeared – my account, my emails, everything.”
Chen isn’t alone. According to new data from the Canadian Anti-Fraud Centre (CAFC), Canadians have already lost over $103 million to cryptocurrency investment scams in just the first eight months of 2024. This represents a 34% increase compared to the same period last year.
The CAFC’s latest report reveals that crypto fraud has now surpassed romance scams to become the costliest form of fraud in Canada. Jeff Thomson, senior RCMP intelligence analyst with the CAFC, explained during our phone interview that the technological complexity of these scams makes investigation particularly challenging.
“These operations are sophisticated and often based overseas,” Thomson said. “They use legitimate-looking websites, fake regulatory approvals, and complex psychological manipulation to gain victims’ trust.”
My investigation into these scams uncovered several concerning patterns. The most prevalent scheme involves “pig butchering” – where scammers build relationships with victims over weeks or months before convincing them to invest in fraudulent platforms. The name comes from the practice of “fattening up” victims before the financial slaughter.
Court documents I reviewed from a recent Ontario Securities Commission enforcement action revealed how one such operation employed over 50 people working in shifts to manage hundreds of potential victims. The scammers used scripts to address common concerns and deployed artificial intelligence to create convincing fake identities.
Another troubling trend is the rise of recovery scams. After victims realize they’ve been defrauded, they’re approached by supposed recovery experts who claim they can retrieve the lost funds – for an upfront fee, of course.
“I was so desperate I nearly fell for it,” admitted Sandra Lapointe, a 52-year-old teacher from Quebec who lost $35,000 in a crypto scam earlier this year. “They knew details about my original investment that I hadn’t made public. It wasn’t until they asked for $3,000 to ‘release’ my funds that I realized it was the same scammers coming back for more.”
The Canadian Securities Administrators (CSA) has taken note of the escalating problem. In July, they issued a public alert warning investors about unregistered crypto trading platforms. I spoke with Grant Vingoe, Chair of the Ontario Securities Commission, who emphasized the importance of checking registration status.
“Before investing a single dollar, Canadians need to verify if the platform is registered with securities regulators,” Vingoe said. “Registration helps ensure the platform meets certain standards and provides some investor protection.”
Despite regulatory efforts, the technological nature of these scams presents unique challenges. Ryan Clements, a securities law professor at the University of Calgary whom I interviewed for this piece, pointed out that many scammers operate outside Canadian jurisdiction.
“These operations can be based anywhere in the world, making enforcement incredibly difficult,” Clements explained. “They use cryptocurrency precisely because transactions are generally irreversible and can be difficult to trace when obscuring techniques are employed.”
My review of over 50 victim statements collected through public court filings shows that scammers target Canadians of all ages and backgrounds. While seniors remain vulnerable, there’s been a notable increase in younger victims who are more familiar with cryptocurrency but overestimate their ability to identify scams.
The CAFC data indicates the average loss per victim now exceeds $40,000, with some individuals reporting losses in the millions. What makes these scams particularly effective is their psychological sophistication.
I spoke with Dr. Anastasia Kuzminykh, a researcher at the University of Waterloo who studies online trust and deception. She explained that scammers exploit fundamental human vulnerabilities.
“These criminals create artificial situations of scarcity and urgency, while simultaneously building trust through small wins,” Kuzminykh said. “Victims often see small returns initially, which convinces them to invest more substantial amounts.”
The RCMP and provincial securities regulators have launched several joint operations targeting these scams, but resources remain limited compared to the scale of the problem. Detective Sergeant Vance Morgan with the RCMP’s Cybercrime Division told me they’re focusing on prevention.
“Once the money leaves Canada, recovery becomes extremely difficult,” Morgan explained. “We’re working with banks and money services businesses to identify suspicious transactions before they’re completed.”
For those who have already fallen victim, the path to recovery is challenging. Legal remedies exist, but as I discovered through court records, successful recovery is rare. Class action lawsuits against some of the larger fraudulent operations are working their way through Canadian courts, but even successful judgments may prove uncollectable.
As cryptocurrency adoption grows in Canada, experts warn that scams will continue to evolve. The best protection remains vigilance and education. The CAFC recommends verifying registration with securities regulators, researching thoroughly before investing, and treating unsolicited investment opportunities with extreme skepticism.
For those like Michael Chen, these warnings come too late. “I thought I was too smart to fall for a scam,” he told me as we finished our coffee. “Now I know nobody is immune.”
