Crypto Scams Surge 100% in Canada Amid Geopolitical Uncertainty

Canada’s securities regulator has issued a stark warning about the escalating number of cryptocurrency scams, attributing the rise to the unpredictable geopolitical environment. The regulator highlighted that the volatile global economic climate has fostered an atmosphere where fraudulent activities are more prevalent. This warning comes as investors increasingly turn to digital assets in search of higher returns amidst economic uncertainty.

The rise in crypto scams is particularly alarming given the lack of regulatory oversight in the cryptocurrency market. Unlike traditional financial markets, the crypto space is largely unregulated, making it easier for scammers to exploit unsuspecting investors. The regulator emphasized the importance of investor education and vigilance in protecting against these scams. They advised investors to be cautious of promises of high returns and to thoroughly research any investment opportunity before committing funds.

The regulator also noted that the geopolitical landscape has become increasingly unpredictable, with events such as trade wars and political instability adding to the uncertainty. This unpredictability has led to a surge in interest in cryptocurrencies, as investors seek alternative assets that are not tied to traditional financial systems. However, this increased interest has also attracted more scammers, who are taking advantage of the lack of regulation and the public's growing interest in digital assets.

During an annual event, Grant Vingoe, the chief executive officer of the Ontario Securities Commission, stated that the country is now in an environment “where there’s more scams, more fraud, more insider trading, more corruption, enabled by an atmosphere in which anything goes and the traditional norms are not being observed as they have in the past.” Vingoe linked the rise in fraud to wider instability, stating that the “unpredictability of the geopolitical environment leads to an environment where people who are interested in doing wrong will find a place.”

In 2024 alone, victims reported nearly $640 million in losses, according to data from the Canadian Anti-Fraud Centre. Bonnie Lysyk, the OSC’s executive vice-president of enforcement, said the Commission wants to focus on “high-impact cases,” adding that the Commission wants to “put in place additional strategies to disrupt those who harm investors earlier” as the crypto space “is ripe for fraud.”

Canada began tightening crypto-related regulations in February 2023 when the Canadian Securities Administrators required all crypto trading platforms operating in the country to sign legally binding pre-registration undertakings. This came on top of existing restrictions, including the prohibition on offering margin trading to Canadian users. Since the CSA considers some stablecoins to be securities or derivatives, exchanges were also prohibited from offering stablecoins or value-referenced crypto through contracts without prior approval, making it challenging for many crypto platforms to comply.

The warning from the securities regulator serves as a reminder of the risks associated with investing in cryptocurrencies. While digital assets offer the potential for high returns, they also come with significant risks, including the possibility of falling victim to a scam. Investors are urged to exercise caution and to conduct thorough due diligence before making any investment decisions. The regulator also called on the government to implement stricter regulations to protect investors and to prevent fraudulent activities in the crypto market.