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Cryptocurrency fraud is a growing concern in Canada

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When we are talking about cryptocurrencies, we should also talk about the risks that are associated with them. For starters, several years ago, who would have believed that its popularity would be so massive in 2021, and that bitcoin’s value would reach almost $60000? Even as recent ago as September 2020, people would not have believed it. But here we are now with the new reality.

At the time of writing this article, some countries are thinking about implementing bitcoin as a payment method for many different services, some of them have already done so, and if you live in the US, now you can buy Tesla with bitcoin.

However, the global pandemic has caused many unusual events and elevated people’s creativity to the highest level, moreover, cryptocurrency has allowed some people to exploit the flexibility of the system to their advantage and many innovations were suggested to the public. When we talk about the advantages of the system and industry, there are a lot of things to be taken into consideration. Due to so many people being stuck at home during COVID restrictions and many others losing their jobs, some people have started thinking about new income sources, and crypto-related activities have become very attractive. However, due to the lack of knowledge, a lot of people have also become victims of fraud and the scammers have taken their activities to a higher level. It is not a surprise that some Canadians have fallen victim to some cryptocurrency scams.

Cryptocurrency scams during the COVID pandemic

As we have already mentioned, the global pandemic made people use their creativity the way they wanted and scammers were not an exception in this case too. There were a lot of different methods or tools that they were using to reach their goals.

One of the most frequent cases was the trading scams, as people were suggested on the internet to become involved in the trading process. They got hooked by the flashy ads, seemingly real celebrity and political endorsements, fake reviews, and promises of high returns. But once they were signed up, they deposited money into the so-called “trading platform,” but when they wanted to cash out, he says, they couldn’t get the money out.

There were also cases of cryptocurrency job scams, as people were given false job promises. Last year, in Canada there was a case that McLaughlin on Your Side investigated two websites that were seemingly offering jobs. Both had fake Vancouver addresses listed on their websites. Once victims had applied to the jobs, they were convinced to make hotel reservations for a youth group supposedly travelling to Canada on an exchange program. They were told to pay money by bitcoin machines to make the payments for the hotel.

Most frequent were crypto-related calls. A lot of people were contacted during this process and made the suggestion to tell the so-called brokers their credit card details and ID numbers and that they would help them to open their accounts on their exchange platform.

One more additional aspect was the increased number of online gambling websites that appeared to be the solution to the traditional casinos because they were closed due to the covid pandemic. Due to the fact that it is conducted online, the bitcoin and blockchain system gives the opportunity to use it as a payment method in online casinos, this is when and how the popularity of Canadian Bitcoin casinos started its uprise. It was more efficient, quicker, and more simple in comparison to the traditional way of transferring money online and involve the banking system in it.

Finally, to sum up, in numbers, in Canada, BBB has received 914,000 complaints at the beginning of 2020 about negative experiences and encounters with fraudulent companies involving cryptocurrency schemes. And the scams ranked fourth on the BBB’s national list of top 10 riskiest scams across Canada last year, and the victims were losing an average of $3,617.

Crypto regulations in Canada

According to the official statement, people in Canada are allowed to use cryptocurrencies on the internet to buy certain goods and services and there are some stores that accept them as payment. However, they do not have the name of legal tender, because the Canadian Dollar is considered as the national currency. In order to be legal tender, it should be issued by the Canadian Central bank in the form of banknotes.

However, Canadian tax laws apply to cryptocurrencies as well. The Canada Revenue Agency has considered it to be a commodity but not a government-issued currency. This is why paying for example with bitcoin for the goods or services is more like a barter than actually paying for it.

At the beginning of 2021 cryptocurrency usage increased, crimes associated with it also increased as it provided a new environment to those who were working on taking people’s money. An RCMP officer said that crypto-related fraud in Canada has dramatically increased by 400% from 2017 to 2020. In the first eight months of 2020, Canadians had lost $11 million in through digital currency scams.

Scammers were telling possible victims that they were either government officials or police officers to increase the level of trust. After that people were warned not to give away their personal information and that government officials do not demand payments with the cryptocurrency. It is obvious that for that time Canadians did not have enough information on how to protect themselves, as the research shows that Europeans are more informed about the possible upcoming scams than Canadians.

Summary

Finally, to sum up, in 2020 a new reality for the crypto-industry was created. Virtual currencies started thriving due to its convenience and efficiency. However, as in most cases, rising popularity of anything also increases the potential for fraudsters. However, fraud in the case of the crypto-industry is very specific and it is almost impossible to find the scammers, due to the decentralized nature of bitcoin and the possibility of making the transactions anonymously. This is why the governments of many different countries are trying to make regulations that would restrict the platforms to operate if they do not have a special license. It is possible that a lot of countries will start doing the same as it might have the spillover effect as it usually happens. It is evident that the Canadian government is trying to make people more informed about the possible consequences of becoming involved in the crypto market. One of the main reasons for the increase in fraud victims might be the fact that they were not made aware or warned about the intensity of scamming within the industry. Yet, the public needed to know that the scammers contacting them using government government credentials are all frauds. After so many cases involving people losing millions of dollars, the necessity of making the clear explanation has become vitally important.

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