Tales from the Cryptocurrency Investment Ghouls, Goblins and Ghosts

Cryptocurrency investment offers could be more of a trick than a treat

October 29, 2018 – OTTAWA, ON – Competition Bureau

You are on social media and you come across what appears to be a “once-in-a-lifetime” opportunity to cash in on the next big cryptocurrency investment: “You may have missed out on the bitcoin rush, but here’s your chance to make a lot of money…quickly. You need to invest NOW!”

Be very wary. Though there are cryptocurrency investments that are legitimate, fraudsters are increasingly taking advantage of the cryptocurrency hype to take your money.

For example, using Internet ads and websites promising high returns, fraudsters can trick you into investing in fake initial coin offerings disguised as funding for the development of new cryptocurrency. Simply put, your ‘investment’ in these bogus offerings ends up in the hands of the fraudsters.

Fraudsters are also conning investors who want to get in on the cryptocurrency craze with classic scams like pyramid schemes or fraudulent market manipulation.

If you consider investing in initial digital coin offerings, cryptocurrencies or any cryptocurrency-related products, be careful. Here are five tips to protect yourself from fraudulent cryptocurrency investment schemes:

1. Learn about cryptocurrencies and know the risks. Understand what you are investing in. Recognize that information about the investment may be false or misleading. Also, know that it may be more difficult to enforce your rights against a business offering cryptocurrencies if they are not in Canada.
   
2. Be wary of any investment tip you receive through social media. Before investing your money, consult with a trusted financial advisor to determine if the investment is legitimate and the risks involved.
   
3. Be wary of “get-rich-quick” promises. There is no guarantee that you’ll make money. In fact, you could lose all your money. All investments come with risks.
   
4. Be skeptical of celebrity endorsements and testimonials. Know that celebrity endorsements and testimonials can be fabricated to promote fraudulent cryptocurrency investments.
   
5. Do your own investigation. Research the company and individuals behind the cryptocurrency investment. In general, anyone selling securities or offering investment advice must be registered with their provincial or territorial securities regulator. To check registration, visit CheckBeforeYouInvest.ca.