The Nova Scotia Securities Commission is warning residents of a crypto scamwhich she says is often cruelly labeled a “pig butcher” plan.
The commission said in a statement released Monday morning that the scam is causing “individual losses of hundreds of thousands of dollars” in Canada and the United States. It is estimated that over $1 billion has been lost to these scams in North America since 2021.
According to the statement, the scam begins with an unsolicited text, email or social media message, or when a victim clicks on a crypto trading online ad.
The victim is then often asked to communicate via another messaging platform, such as WhatsApp, Telegram or SMS, which “makes finding the scammer difficult, if not impossible”, the province said.
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Scammers attempt to develop a personal relationship with a victim and then persuade them to open a crypto trading account where they will deposit a small amount of money. The province said scammers will often say “big profits that can be made by ‘investing’ in crypto.”
After the first deposit, the scammer will show the victim screenshots of fake “account statements” showing large earnings to convince the victim to invest more. This strategy is called “fattening the pig,” the province said.
“These are fake documents because the scammer didn’t actually use the money to buy crypto.”
Then the scammer will tell the victim that they have to “pay tax or fictitious fees to access their funds” when the victim wants to withdraw their money from the account. Whether or not the victim pays these fees, the scammer often disappears.
“The scammers not only gain access to the funds deposited by the victim, but ask the victim to download trading apps or file sharing software that allows the scammer to access the mobile device or the victim’s computer to obtain personal and financial information that they can use to steal more money,” warns the security commission.
“The scammer will also sell this information to other scammers, who will attempt to further exploit the victim.”
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He said the final part of the scam is a “recovery scam”, where the victim is contacted by someone who says they can get their lost money back for a fee.
“If you are a victim, you are unlikely to get your money back,” the province said. Authorities are advising Nova Scotians not to respond to unsolicited inquiries or advertisements asking for money to recoup losses.
According to the commission, not much can be done once a person falls victim to a crypto scammer.
“While the Commission is interested in receiving reports of crypto investors’ losses as a result of these scams, in experience there is generally little that can be done to recover these funds,” the statement read.
The only way investors can protect themselves is to recognize and avoid the scam.
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Paul Radford, chairman of the Nova Scotia Securities Commission, said in the statement that these scams have become widespread and claim many victims.
“Everyone should beware for themselves, their friends and family members of unsolicited messages or advertisements recommending investing in crypto assets,” Radford said.
“Canadians who wish to trade crypto assets should only do so with Canadian-registered crypto platforms or dealers.”
A list of registered platforms is available on the NSSC website.
But, the commission warns that trading crypto assets is “highly risky” due to scams, volatility and hacking. He advises the public never to use credit cards or lines of credit for investing because “losses from scams are often large and irrecoverable”.
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