News Release

Vancouver – Law enforcement and government agencies are joining forces to warn British Columbians about the escalating threat of sophisticated scams that use extended online communication to earn people’s trust before convincing them to invest in various types of investments, often involving crypto. The agencies include the BC RCMP Financial Integrity Program, the B.C. Securities Commission (BCSC), Burnaby RCMP, the Canadian Anti-Fraud Centre (CAFC), the United States Secret Service and the Vancouver Police Department.

These long cons employ social manipulation and financial grooming tactics to exploit the public’s interest in – and incomplete understanding of – crypto assets, luring victims into handing over more and more money. The method has come to be known as “pig butchering” because it’s akin to fattening a pig before slaughter.

Last year, British Columbians reported losses of $46.4 million from online investment scams to the CAFC, with most of those losses involving crypto. In the first seven weeks of 2024, B.C. victims have already reported losses of $1.3 million. The CAFC estimates that only five per cent of fraud victims report such incidents to authorities.

Fraudsters target victims through a variety of methods, including on social media, dating websites and text messages, often under pretense of a message that was meant for someone else. They may try to befriend the victim, develop an online romance with them or pretend to be legitimate investment advisers. Regardless of the specific method, the perpetrators develop relationships with the victims, often over a period of weeks or months.

Eventually, the scammer will recommend putting money into an investment opportunity, often involving crypto assets. Once the victim sends a substantial amount of money or crypto, the scammer abruptly cuts off contact.

In other cases, when the victims ask for their money back, the fraudster agrees to do so as long as they pay additional funds, supposedly for taxes and other fees and then disappears.

After the loss becomes apparent, the victims are often approached by a new person or organization who offer to help recoup their funds in exchange for a recovery fee. These offers are also fraudulent.

The perpetrators are often criminal gangs operating outside Canada.

Individual losses have reached more than a million dollars.

Red flags of long-term investment fraud and financial grooming:

1. Random overtures from strangers over social media that lead to exchanges over weeks or months. The person will often suggest moving to private messaging apps, in an attempt to keep the conversation secret. However, the relationship always unfolds exclusively online.
2. After a while, this person will eventually mention that they have made easy money in the crypto market, often based on exclusive or “inside” information from a family member or friend, or through “professional traders” or “proprietary trading algorithms.”
3. They will encourage the victims to visit websites involving crypto. The websites may seem legitimate, and may use terms like “investment packages” and “guaranteed rates of return.” The website address sometimes look similar to well-known financial institutions or websites.
4. The victim may be given financial records that show returns or be allowed to make a small withdrawal from the website to provide a false sense of reassurance and legitimacy.

What British Columbians can do to protect themselves:

1. Be suspicious about unsolicited messages on social media sites or “wrong number” texts, especially if the sender tries to develop a bond with you.
2. Don’t invest based solely on the advice of someone you met online. Take time to assess the legitimacy of the investment and consult with registered financial professionals if needed.
3. Exercise caution if an online connection suggests investing in crypto, opening an account on a trading website that exclusively accepts crypto or asks you to transfer funds to their online wallet or a specific trading platform.
4. Check the BCSC’s Investment Caution List (ICL). If a potential investment is on the list, it means there are concerns it might be a fraud. However, the ICL is not exhaustive, so if it doesn’t appear on the list, it does not necessarily mean it is a safe investment.
5. Buy crypto assets through a trading platform registered with Canadian securities regulators.
6. Steer clear of promises of returns that are big, quick and low-risk. For comparison, the average annual return of the S&P/TSX Composite Index (a basket of Canadian stocks) was 6.7 per cent for the past decade.
7. If you suspect that you or someone you know has been the victim of investment fraud, report it the BCSC or your local police service.
8. To learn more about the various types of fraud affecting the public you can also visit the CAFC website.

Quotes:

Doug Muir, the B.C. Securities Commission's Director of Enforcement

“Fraudsters are experts at exploiting trust and manipulating their victims into losing potentially devastating amounts of money – but there are things you can do to protect yourself from becoming a victim. We want to empower the public with the knowledge they need to identify and avoid these sophisticated online investment scams.”

Jeffrey Thomson, Canadian Anti-Fraud Centre’s Manager of Operations

"In 2023, investment fraud cost Canadians more than $300 million in losses. The social and financial harms caused by these cyber-enabled frauds pose a significant threat to Canadians and the economic integrity of Canada. This Fraud Prevention Month the CAFC wants to encourage Canadians to develop and practice safe online habits to help them recognize, reject and report fraud."

About the B.C. Securities Commission (www.bcsc.bc.ca)

The B.C. Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

• A securities market that is fair and warrants public confidence
• A dynamic and competitive securities industry that provides investment opportunities and access to capital.

Media Contact:
Elise Palmer
604-899-6830

Public inquiries:
604-899-6854 or 1-800-373-6393 (toll free)
inquiries@bcsc.bc.ca

Learn how to protect yourself and become a more informed investor at www.investright.org