Police struggling to keep pace with cryptocurrency fraudsters

Ottawa police say they’re receiving daily reports of cryptocurrency fraud from victims who have been swindled out of their savings and investments, with very little chance of getting their money back.

The largest loss to date involved a victim who was bilked of $2 million, police said.

Acting Sgt. Alex Wolf, a detective in the Ottawa Police Service’s organized fraud unit, said the reported cases likely represent only a fraction of the fraud that’s occurring. Wolf said victims come from a wide range of backgrounds, but fraudsters appear to be targeting one group in particular.

I would say people who, later in life who have more income, he said. What we see is people in their 40s, 50s and 60s suffer money loss, and they are also the dominant cohort in our community victimized by the cryptocurrency fraud.

Police say the bigger the wallet, the greater the risk of fraud, and they warn potential investors that there’s no easy money or huge returns coming from cryptocurrency.

Once the money’s gone it’s next to impossible to recover, police say.

How it works

The fraud typically starts with a link to a deepfake video featuring Donald Trump, Elon Musk, Doug Ford or some other public figure promising easy money by investing in a particular cryptocurrency platform.

Police say no matter how convincing they seem, the deepfakes have been engineered by artificial intelligence.

Acting Sgt. Alex Wolf is a detective with the Ottawa Police Service’s organized fraud unit. (Chris Black / CBC) Photo: Radio-Canada / Chris Black

The unsuspecting investor transfers money as instructed and watches as their balance appears to grow. In fact, the money is going into the pockets of scammers, whom police describe as highly skilled.

The difficulty for a local police service is to … understand this type of criminal activity requires software, specialized training, [a] certain level of interest and understanding of the topic, Wolf said.

Foreign actors

The money moves at lightning speed, and the scammers could be anywhere, Wolf said.

For a while, victims are led to believe their investment is growing. When they realize they’ve been scammed, they often feel shame. In some cases, they turn to fake recovery agencies before ultimately reporting the fraud to police.

Ideally, that occurs within a week of the initial transfer, but by then their money is likely already in the hands of foreign actors, Wolf said.

They don’t reside in Canada, they don’t reside in U.S.A. or North America. We’re looking for someone abroad — east Asia, West Africa, eastern Europe.

Fraud investigators triage these cases based on solvability, the prospect of conviction and the likelihood of the victim recovering their money.

They’re hiding behind different platforms, different names, different financial institutions, and are often in jurisdictions that are not the most compliant with foreign law enforcement requests. So the combination of things make it challenging from the get-go, Wolf said.

By the time police get involved, however, Wolf said the money has gone through so many channels that they’re already a step behind.

‘There’s no way to keep up’

The RCMP will look at local cases if asked, but typically investigate only if organized crime is involved.

I think the technology is advancing faster than anyone could catch up. I could spend every minute of every day researching cryptocurrency and not know everything about it, said Sgt. Gordie Jones, one of the national police force’s cryptocurrency co-ordinators. There’s no way to keep up.

Jones said cryptocurrency isn’t just a target for fraud — it’s also appearing in other crimes because it can be moved from one jurisdiction to another with the click of a button, an attractive feature for criminals looking to launder money.

According to the Canadian Anti-Fraud Centre, Canadians lost over million to crypto investment fraud from Jan.

1 to Sept. 30, 2024. In Ontario, victims lost nearly million during that period.

This article is republished from RCI.