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| Meta Title | How to protect yourself from crypto scams | National Bank |
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| Boilerpipe Text | What is cryptocurrency?
Cryptocurrencies are a digital asset (virtual currency) that can be
exchanged for certain goods or services.
Some investors treat
cryptocurrency as an asset whose value can rise or fall like shares on
the stock market.
However, digital currency is generally considered more volatile than
stocks. There are several cryptocurrencies out there, but
Bitcoin
and
Ethereum
are the most well known.
What are crypto scams?
In most cases, cryptocurrency scams are variations on common schemes
with the age-old objective of squeezing money out of you.
These
scams are becoming increasingly common
for a number of reasons:
Virtual currencies are generally less regulated by government and
regulatory authorities.
They enable virtually anonymous transactions.
Cryptocurrency therefore represents an easier target than
traditional currency, which is regulated by the banking system.
What are the different types of
cryptocurrency scams?
While there are several types of scams related to cryptocurrency,
they can be grouped into two main categories:
The transfer of funds:
scammers use a number of techniques to
convince you to send them money.
Information theft:
scammers attempt to obtain your personal
information in order to steal your identity and embezzle your funds.
These scams often rely on a technique called “social engineering,”
whereby a scammer contacts you – usually by phone, text message,
email or social media – and tries to earn your trust.
They
then trick you into providing personal information or have you click
on a fraudulent link, for example.
→
Read
our article on how to avoid social media fraud
What are the most common
cryptocurrency scams?
Scams tied to the launch of a new cryptocurrency
Initial coin offerings (or ICOs), are extremely risky and highly
volatile forms of investment.
Why? Because they take place in an environment conducive to
manipulation and fraud. From a technological standpoint, it’s easy to
create coins and market them on certain platforms without any third
party authorizing or overseeing the practice.
Cryptocurrency investment scams
This type of scam is a variation on investment fraud, only it uses
cryptocurrency as a payment method or investment product.
It
involves offering to make (fake) investments in a virtual currency,
promising you substantial, guaranteed returns with no financial risk.
There are also fake exchange sites: if you buy cryptocurrency on
these platforms, you’ll definitely lose your money.
Like most scams, these schemes are usually based on a sense of
urgency:
for example, you’ll be told that this is an exclusive
offer for a limited time only. To ensure a steady stream of new
victims, scammers often use Ponzi schemes and other pyramid structures
to get you to recruit new targets from your circle.
Phishing and SIM card theft
If you make transactions on a legitimate cryptocurrency platform,
ill-intentioned people could get hold of your username, password or
digital wallet key – through phishing, for example – just as they
could get the login to your online bank account. This scheme,
combined with a SIM swap
, would enable
them to take control of your account and steal or misappropriate your cryptocurrency.
→
Read
our article on phishing to learn how to recognize fraudulent
communications and avoid taking the bait
Transactions requiring payment in cryptocurrency
Good to know
:Â
beware of tempting job offers that require you to receive training in advance
. This training will be at your own expense and payable only in cryptocurrency.
Shopping sites or classified ads: Be vigilant when you’re asked to
pay in cryptocurrency for any product, good or service.
If
you’re sent a hyperlink to make the transaction and never receive what
you paid for, you won’t be able to contact the person who sold it to you.
What best practices should you
adopt to protect yourself from crypto scams?
You can protect yourself from crypto scams by developing good
reflexes. Here are a few to keep in mind:
If you receive a suspicious proposal from someone you trust,
contact them
by another means (by phone, for example) to
find out if they really sent you the message.
Beware of
tactics that create a sense of urgency
, whether
they’re
limited-time deals
or
offers that sound too good
to be true,
like investments with huge returns and no risk.
Don’t use a cryptocurrency site that you discover through an
unsolicited message or that you’ve never heard of before.
Check
if the platform is valid by making sure it’s registered with the
regulatory agency in your province
(for example, the Autorité
des marchés financiers or the Investment Industry Association of
Canada [IIAC]).
Never divulge the password or private key (or the 12- to 24-word
recovery phrase) for your digital wallet for any reason whatsoever.
Be wary when the only option for making a transaction is via
cryptocurrency.
This is probably a scam, as no credible
institution requires its customers to make this type of payment exclusively.
What should you do if you fall
victim to a cryptocurrency scam?
Anyone can be deceived. If you think you may have been scammed, stay
calm and
follow
these essential steps to protect yourself
.
Contact your financial institution so they can secure your bank
accounts and keep an eye out for any suspicious activity.
Change the passwords to all your accounts.
Report the fraud by following the instructions provided by the
Canadian Anti-Fraud Centre.
File a complaint with your local police station, which may choose
to open an investigation.
Beyond cryptocurrency scams, it’s important to take every step you
can to protect yourself from all types of financial fraud.
Want to learn more? Our
fraud prevention page
Â
will provide you with a
wealth of other useful information. |
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Close
# Cryptocurrency scams: pitfalls to avoid
30 October 2024 by National Bank
**Financial scams associated with cryptocurrencies are becoming increasingly common. According to the Canadian Anti-Fraud Centre, crypto scams are the most lucrative type of fraud in the country, with losses of several hundred million dollars a year. If you’re thinking of investing in cryptocurrency – or already have – here are some tips on how to spot scams and protect your savings.**
**In this article:**
- [What is cryptocurrency?](https://www.nbc.ca/personal/advice/security/cryptocurrency-fraud-avoiding-the-pitfalls.html#p1)
- [What are crypto scams?](https://www.nbc.ca/personal/advice/security/cryptocurrency-fraud-avoiding-the-pitfalls.html#p2)
- [What best practices should you adopt to protect yourself from crypto scams?](https://www.nbc.ca/personal/advice/security/cryptocurrency-fraud-avoiding-the-pitfalls.html#p3)
- [What should you do if you fall victim to a cryptocurrency scam?](https://www.nbc.ca/personal/advice/security/cryptocurrency-fraud-avoiding-the-pitfalls.html#p4)
## What is cryptocurrency?
**Cryptocurrencies are a digital asset (virtual currency) that can be exchanged for certain goods or services.** Some investors treat cryptocurrency as an asset whose value can rise or fall like shares on the stock market.
However, digital currency is generally considered more volatile than stocks. There are several cryptocurrencies out there, but **Bitcoin** and **Ethereum** are the most well known.
## What are crypto scams?
In most cases, cryptocurrency scams are variations on common schemes with the age-old objective of squeezing money out of you. **These scams are becoming increasingly common** for a number of reasons:
- Virtual currencies are generally less regulated by government and regulatory authorities.
- They enable virtually anonymous transactions.
**Cryptocurrency therefore represents an easier target than traditional currency, which is regulated by the banking system.**
### What are the different types of cryptocurrency scams?
While there are several types of scams related to cryptocurrency, they can be grouped into two main categories:
- **The transfer of funds:** scammers use a number of techniques to convince you to send them money.
- **Information theft:** scammers attempt to obtain your personal information in order to steal your identity and embezzle your funds.
**These scams often rely on a technique called “social engineering,” whereby a scammer contacts you – usually by phone, text message, email or social media – and tries to earn your trust.** **They then trick you into providing personal information or have you click on a fraudulent link, for example.**
→ [Read our article on how to avoid social media fraud](https://www.nbc.ca/personal/advice/security/social-medias-fraud-scams.html)
### What are the most common cryptocurrency scams?
**Scams tied to the launch of a new cryptocurrency**
**Initial coin offerings (or ICOs), are extremely risky and highly volatile forms of investment.**
Why? Because they take place in an environment conducive to manipulation and fraud. From a technological standpoint, it’s easy to create coins and market them on certain platforms without any third party authorizing or overseeing the practice.
**Cryptocurrency investment scams**
**This type of scam is a variation on investment fraud, only it uses cryptocurrency as a payment method or investment product.** It involves offering to make (fake) investments in a virtual currency, promising you substantial, guaranteed returns with no financial risk.
There are also fake exchange sites: if you buy cryptocurrency on these platforms, you’ll definitely lose your money.
**Good to know**: Want to get started as a self-directed investor? Before investing in any online or offline platform, make sure you do your research: you’ll want to ensure the financial institution has a track record and can be trusted with your money. [Consult our article to know more about investment fraud and how to avoid it](https://nbdb.ca/learning-centre/investment-strategies/protecting-portfolio/avoid-investment-fraud.html).
**Like most scams, these schemes are usually based on a sense of urgency:** for example, you’ll be told that this is an exclusive offer for a limited time only. To ensure a steady stream of new victims, scammers often use Ponzi schemes and other pyramid structures to get you to recruit new targets from your circle.
**Phishing and SIM card theft**
If you make transactions on a legitimate cryptocurrency platform, ill-intentioned people could get hold of your username, password or digital wallet key – through phishing, for example – just as they could get the login to your online bank account. This scheme, [combined with a SIM swap](https://antifraudcentre-centreantifraude.ca/scams-fraudes/sim-eng.htm), would enable them to take control of your account and steal or misappropriate your cryptocurrency.
→ [Read our article on phishing to learn how to recognize fraudulent communications and avoid taking the bait](https://www.nbc.ca/personal/advice/security/protect-yourself-from-phishing.html)
**Transactions requiring payment in cryptocurrency**
**Good to know**: **beware of tempting job offers that require you to receive training in advance**. This training will be at your own expense and payable only in cryptocurrency.
**Shopping sites or classified ads: Be vigilant when you’re asked to pay in cryptocurrency for any product, good or service.** If you’re sent a hyperlink to make the transaction and never receive what you paid for, you won’t be able to contact the person who sold it to you.
## What best practices should you adopt to protect yourself from crypto scams?
You can protect yourself from crypto scams by developing good reflexes. Here are a few to keep in mind:
- If you receive a suspicious proposal from someone you trust, **contact them** by another means (by phone, for example) to find out if they really sent you the message.
- Beware of **tactics that create a sense of urgency**, whether they’re **limited-time deals** or **offers that sound too good to be true,** like investments with huge returns and no risk.
- Don’t use a cryptocurrency site that you discover through an unsolicited message or that you’ve never heard of before. **Check if the platform is valid by making sure it’s registered with the regulatory agency in your province** (for example, the Autorité des marchés financiers or the Investment Industry Association of Canada \[IIAC\]).
- Never divulge the password or private key (or the 12- to 24-word recovery phrase) for your digital wallet for any reason whatsoever.
- **Be wary when the only option for making a transaction is via cryptocurrency.** This is probably a scam, as no credible institution requires its customers to make this type of payment exclusively.
## What should you do if you fall victim to a cryptocurrency scam?
Anyone can be deceived. If you think you may have been scammed, stay calm and [follow these essential steps to protect yourself](https://www.nbc.ca/personal/advice/security/identity-theft-protection.html).
- Contact your financial institution so they can secure your bank accounts and keep an eye out for any suspicious activity.
- Change the passwords to all your accounts.
- Report the fraud by following the instructions provided by the Canadian Anti-Fraud Centre.
- File a complaint with your local police station, which may choose to open an investigation.
**Further reading** Check out these articles to learn more about the different types of fraud:
[→ How to create a strong password](https://www.nbc.ca/personal/advice/security/how-to-create-good-password.html)
[→ How to protect your email inbox from fraud](https://www.nbc.ca/personal/advice/security/email-security.html)
[→ Interac e-Transfer®: How to better protect yourself against fraud](https://www.nbc.ca/personal/advice/security/how-protect-interac-etransfer-scams.html)
Beyond cryptocurrency scams, it’s important to take every step you can to protect yourself from all types of financial fraud.
**Want to learn more? Our** [**fraud prevention page**](https://www.nbc.ca/abcs-of-security/fraud.html) **will provide you with a wealth of other useful information.**
### Legal disclaimer
Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.
The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.
This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.
The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.
Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).
Tags :
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| Readable Markdown | ## What is cryptocurrency?
**Cryptocurrencies are a digital asset (virtual currency) that can be exchanged for certain goods or services.** Some investors treat cryptocurrency as an asset whose value can rise or fall like shares on the stock market.
However, digital currency is generally considered more volatile than stocks. There are several cryptocurrencies out there, but **Bitcoin** and **Ethereum** are the most well known.
## What are crypto scams?
In most cases, cryptocurrency scams are variations on common schemes with the age-old objective of squeezing money out of you. **These scams are becoming increasingly common** for a number of reasons:
- Virtual currencies are generally less regulated by government and regulatory authorities.
- They enable virtually anonymous transactions.
**Cryptocurrency therefore represents an easier target than traditional currency, which is regulated by the banking system.**
### What are the different types of cryptocurrency scams?
While there are several types of scams related to cryptocurrency, they can be grouped into two main categories:
- **The transfer of funds:** scammers use a number of techniques to convince you to send them money.
- **Information theft:** scammers attempt to obtain your personal information in order to steal your identity and embezzle your funds.
**These scams often rely on a technique called “social engineering,” whereby a scammer contacts you – usually by phone, text message, email or social media – and tries to earn your trust.** **They then trick you into providing personal information or have you click on a fraudulent link, for example.**
→ [Read our article on how to avoid social media fraud](https://www.nbc.ca/personal/advice/security/social-medias-fraud-scams.html)
### What are the most common cryptocurrency scams?
**Scams tied to the launch of a new cryptocurrency**
**Initial coin offerings (or ICOs), are extremely risky and highly volatile forms of investment.**
Why? Because they take place in an environment conducive to manipulation and fraud. From a technological standpoint, it’s easy to create coins and market them on certain platforms without any third party authorizing or overseeing the practice.
**Cryptocurrency investment scams**
**This type of scam is a variation on investment fraud, only it uses cryptocurrency as a payment method or investment product.** It involves offering to make (fake) investments in a virtual currency, promising you substantial, guaranteed returns with no financial risk.
There are also fake exchange sites: if you buy cryptocurrency on these platforms, you’ll definitely lose your money.
**Like most scams, these schemes are usually based on a sense of urgency:** for example, you’ll be told that this is an exclusive offer for a limited time only. To ensure a steady stream of new victims, scammers often use Ponzi schemes and other pyramid structures to get you to recruit new targets from your circle.
**Phishing and SIM card theft**
If you make transactions on a legitimate cryptocurrency platform, ill-intentioned people could get hold of your username, password or digital wallet key – through phishing, for example – just as they could get the login to your online bank account. This scheme, [combined with a SIM swap](https://antifraudcentre-centreantifraude.ca/scams-fraudes/sim-eng.htm), would enable them to take control of your account and steal or misappropriate your cryptocurrency.
→ [Read our article on phishing to learn how to recognize fraudulent communications and avoid taking the bait](https://www.nbc.ca/personal/advice/security/protect-yourself-from-phishing.html)
**Transactions requiring payment in cryptocurrency**
**Good to know**: **beware of tempting job offers that require you to receive training in advance**. This training will be at your own expense and payable only in cryptocurrency.
**Shopping sites or classified ads: Be vigilant when you’re asked to pay in cryptocurrency for any product, good or service.** If you’re sent a hyperlink to make the transaction and never receive what you paid for, you won’t be able to contact the person who sold it to you.
## What best practices should you adopt to protect yourself from crypto scams?
You can protect yourself from crypto scams by developing good reflexes. Here are a few to keep in mind:
- If you receive a suspicious proposal from someone you trust, **contact them** by another means (by phone, for example) to find out if they really sent you the message.
- Beware of **tactics that create a sense of urgency**, whether they’re **limited-time deals** or **offers that sound too good to be true,** like investments with huge returns and no risk.
- Don’t use a cryptocurrency site that you discover through an unsolicited message or that you’ve never heard of before. **Check if the platform is valid by making sure it’s registered with the regulatory agency in your province** (for example, the Autorité des marchés financiers or the Investment Industry Association of Canada \[IIAC\]).
- Never divulge the password or private key (or the 12- to 24-word recovery phrase) for your digital wallet for any reason whatsoever.
- **Be wary when the only option for making a transaction is via cryptocurrency.** This is probably a scam, as no credible institution requires its customers to make this type of payment exclusively.
## What should you do if you fall victim to a cryptocurrency scam?
Anyone can be deceived. If you think you may have been scammed, stay calm and [follow these essential steps to protect yourself](https://www.nbc.ca/personal/advice/security/identity-theft-protection.html).
- Contact your financial institution so they can secure your bank accounts and keep an eye out for any suspicious activity.
- Change the passwords to all your accounts.
- Report the fraud by following the instructions provided by the Canadian Anti-Fraud Centre.
- File a complaint with your local police station, which may choose to open an investigation.
Beyond cryptocurrency scams, it’s important to take every step you can to protect yourself from all types of financial fraud.
**Want to learn more? Our** [**fraud prevention page**](https://www.nbc.ca/abcs-of-security/fraud.html) **will provide you with a wealth of other useful information.** |
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