READ THE RED FLAGS

• Unsolicited messages from strangers on social media, dating apps, websites, or text messages leading to prolonged exchanges, often moving to private messaging apps.

• Mentions of easy money in the crypto market, often based on exclusive information or through “professional traders.”

• Encouragement to visit crypto-related websites, which may appear legitimate and use terms like “investment packages” and “guaranteed rates of return.”

• Provision of financial records showing returns or allowing a small withdrawal to create a false sense of legitimacy.

HOW TO PROTECT YOURSELF FROM FRAUD

• Be wary of unsolicited messages on social media or “wrong number” texts, especially if the sender tries to develop a bond.

• Avoid investing solely based on advice from someone met online. Consult a registered financial professional if needed.

• Exercise caution if an online connection suggests investing in crypto or transferring funds to specific platforms.

• Be skeptical of promises of large, quick, and low-risk returns.

• Report suspected investment fraud to the CAFC, CIRO, and local police.

• Stay informed and exercise caution to avoid falling victim to investment frauds and romance scams. Visit the CAFC and CIRO websites regularly.

• If you are a victim of this or a similar scam, immediately contact your bank, local police, your provincial or territorial securities commission, and the CAFC.

Key Agencies:

• CAFC (Canadian Anti-Fraud Centre): Central agency in Canada for collecting fraud and identity theft information. Managed by the RCMP, Competition Bureau Canada, and Ontario Provincial Police. 1-800-495-8501

• CIRO (Canadian Investment Regulatory Organization): Regulates investment dealers and mutual fund dealers.

FRAUD FACTS

• Investment fraud losses totaled $309.4 million in 2023.

• Social media losses reported to the CAFC in 2024 totaled $172 million.

• Perpetrators of romance/investment scams often operate outside Canada and have caused individual losses exceeding $1 million.

These scams often lure victims into investing in cryptocurrencies using social media manipulation and financial grooming tactics. Typical scams promise “get rich quick” opportunities and higher-than-normal returns. Unfortunately, victims often lose most or all of their money.

PIG BUTCHERING SCAMS

• Victims are contacted on dating apps, websites, or social media by fraudsters who develop trust.

• The scammer claims success in cryptocurrency investments and offers to help the victim “get rich.”

• Fraudsters use fake online trading platforms to convince victims to transfer funds or crypto, often resulting in an inability to withdraw funds.

• Some fraudsters befriend the victim, develop an online romance, or pose as legitimate investment advisers. Eventually, once funds are sent, the scammer ceases contact.

• Victims requesting refunds may be asked to pay additional “fees” for taxes or services, which is another layer of fraud.

PUMP AND DUMP SCHEMES

• Coordinated fraud attacks where scammers inflate an asset’s price using misleading or fake information.

• Scammers hold large positions in the asset, spread hype, and manipulate social media to attract investors.

• Once the price is pumped, scammers sell off their holdings (“dump”), leaving investors with devalued or worthless assets.

How to Spot Pump and Dump Scams:

1. Sudden price spikes without any fundamental reason (announcements, developments, partnerships).

2. Unsubstantiated hype with grandiose claims, guaranteed returns, or overly optimistic projections.

3. Low trading volume cryptocurrencies suddenly shooting up.

4. Communities promoting specific cryptocurrencies and coordinating activities.

5. Individuals claiming insider information or exclusive insights.

6. High-pressure tactics like FOMO (fear of missing out).

7. Lack of transparency on promoters, fundamentals, or motives.

8. Patterns of sudden price spikes followed by rapid declines.

How to Avoid Pump and Dump Scams:

• Do Your Own Research: Investigate whitepapers, teams, technology, roadmap, and community support.

• Be Skeptical of Hype: Avoid exaggerated claims or guaranteed returns.

• Verify Information: Check multiple credible sources; avoid relying solely on social media.

• Understand Market Dynamics: Recognize sudden spikes, low trading volumes, and coordinated buying.

• Avoid High-Pressure Tactics: Don’t succumb to FOMO or promises of quick profits.

• Use Trusted Platforms: Trade only on reputable, regulated exchanges.

• Seek Professional Advice: Consult financial advisors specializing in crypto investments.

HOW AI HELPS DETECT PUMP AND DUMP SCAMS

• Real-Time Monitoring: AI platforms analyze large volumes of trading data to detect abnormal volumes, price spikes, and coordinated buying.

• Network Analysis: Track wallet addresses, transactions, and behavioral patterns to uncover fraud.

• Anomaly Detection: Detect deviations from historical trading patterns and sudden liquidity changes.

• Adaptive Learning: Generative AI updates detection models based on new data for accuracy.

TYPES OF FRAUDS

• Bank, card, anti-money laundering, payment frauds

• Pump and dump

• Buyer and seller collusion

• Cryptocurrency investment scams, fake exchanges, fake wallets

• Loan stacking, romance scams, rug pull scams

• SIM swapping, synthetic identity theft

• Crypto gaming scams, job scams, wallet drainer attacks

• Fraudulent trading platforms, hacking, HYIP/Ponzi schemes

• Identity theft, ransomware scams, tech support scams, imposter scams

Sources: Datavisor.com, 1-886-2677, 651 Bannon St #300, Sacramento, CA 95811

Other Notable Scams

• Advance Fee Scam: Upfront payment for promised services or high returns.

• Affinity Scams: Target specific cultural, religious, or ethnic groups.

• AI Investment Scam: Promises high returns via proprietary AI or trading bots.

• Asset Recovery Scam: Third party charges fees to recover lost funds.

• Bait and Switch Scam: Advertises appealing products but delivers inferior offers.

• Bitcoin Mining Scam: Fraudulent investment in mining operations.

• Crypto Blackmail Scam: Threats to release personal info unless paid in crypto.

• Crypto Gaming Scam: Fake apps stealing crypto via in-game wallets.

• Crypto Job Scam: Fake recruiters stealing crypto or personal data.

• Crypto Wallet Drainer Attack: Malware that drains crypto wallets automatically.

• Fraudulent Trading Platform: Fake websites/apps simulating real investments.

• High Yield Investment Programs (HYIP): Ponzi schemes promising fast crypto returns.