The Canadian Securities Administrators (CSA) is warning the public about investment schemes involving fraudulent websites that solicit investments in foreign exchange (“forex”), binary options and/or crypto assets.
In particular, fraudsters continue to capitalize on market interest in crypto assets to lure investors into scams, using high-pressure sales tactics and promises of high returns with little or no risk. Investors have reported being directed to a crypto asset trading platform to convert their funds to crypto assets. Once purchased, investors are then encouraged to transfer the crypto assets to a fraudulent, third-party investment website to fund an “account”. In some cases, they are instructed by the fraudsters to download software that enables remote access to their computer for supposed assistance purchasing crypto assets and transferring funds.
The CSA and the Investment Industry Regulatory Organization of Canada (IIROC) have also noted increasing concerns over imposter sites that closely resemble registered firms, regulators and fake endorsements by individuals.
These scams are often promoted through email, texts, websites and social networks. Fraudsters target investors hoping to get in “on the ground floor” with crypto assets and exploit their fear of missing out on the opportunity of a lifetime. Investors may be misled by the convincing sales pitch and the professional appearance of the fraudulent websites.
Investments on fraudulent websites will appear to gain value quickly through manipulated statements. Fraudsters will strongly encourage investors to deposit additional funds using the illusion of rapid gains. Some websites will let investors withdraw a portion of their money to build trust and entice victims to invest more, but any request to withdraw all assets will fail. Ultimately, fraudsters will no longer respond to communication requests from investors.
Investors are encouraged to check the CSA’s Investor Alerts page for a list of firms and individuals to avoid.
Anyone selling investments or providing investment advice in Canada, including platforms that facilitate the trading of crypto assets, must comply with applicable securities or derivatives legislation. Investors should always check the registration of any person or business trying to sell them an investment or give them investment advice. To do this, investors can visit AreTheyRegistered.ca
The CSA encourages investors to:
- Know the red flags of fraud.
- Find out if the firm or individual involved is registered by checking the CSA National Register.
- If the firm or individual is registered, call them using the phone number listed in the Register to confirm that the solicitation is actually from that firm or individual.
- Not rely on unsolicited marketing materials. Do an internet search for the company name and verify the contact information with the financial institution or firm directly.
- Check for misspellings or variations on the company name in the website or email address, including adding extra letters or hyphens to make the fake address look close to the real address.
- Compare and confirm websites. Fake websites may often have odd-looking (or low resolution) logos that do not match the logo of the legitimate company. Do an internet search for the company to determine if the website is legitimate or a duplicate of the real company’s site.
- Refuse to download software that allows remote access to your computer.
- Never give in to pressure or blackmail: transfer your money only after taking the time to think carefully.
- Never share personal information or make any payment before performing these checks.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601-1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.