Montreal man says he lost nearly $400,000 in cryptocurrency scam

MONTREAL —
After losing nearly $400,000 in what he believes was a romance cryptocurrency scam, David still has dreams about the people who did this to him getting arrested and facing justice.

But he knows it’ll likely never happen in real life.

The Montreal resident has been seeing a psychologist ever since he realized that the woman he met on Facebook Dating in February wasn’t who she said she was and coaxed him into slowly emptying out his life savings.

“They’re bloodsuckers, they’re real criminals of the highest degrees,” said David.

David (a pseudonym) agreed to speak to CTV News on the condition that his real name is not published since he is self-employed and he fears revealing his identity will hurt his business.

David appears to be the victim of a modern twist of the typical romance scheme whereby someone dupes another person in a new romantic relationship to send over money for an apparent urgent need and the perpetrator vanishes after the money is paid.

In his case, David said he developed an online relationship with the woman that, at first, appeared to be genuine. They would exchange messages daily on WhatsApp and share photos.

The woman, who was originally from China, would discourage doing video calls with him because she said her English wasn’t good enough for a live two-way call and was more comfortable with text-based chats instead, he said.

After a couple of months, she introduced the idea of investing in Bitcoin mining as a smart way to make money. First, he started with a deposit of $2,000 to convert into cryptocurrency into a site she had recommended to him. 

But before he knew it, he said he eventually transferred all of his life’s savings that he had put aside from the sale of his house — about $390,000 — into this website.

‘I WANT MY MONEY’

By June, news came out that China was cracking down on cryptocurrencies, telling major payment platforms and lenders that crypto trading won’t be tolerated.

So, David said the woman told him to withdraw his money quickly so he wouldn’t lose his investments, which the site claimed had grown to around $900,000 USD.

When he contacted the site, he was told he could get his money out — but there was a catch. He had to pay a 15 per cent tax, which came to around $192,000.

Dumbfounded, he turned to his girlfriend for help.

“Suddenly her tonality changed [from the way] she was acting towards me: all lovey-dovey and always understanding and always there on the phone for me. We spoke, like, four or five times a day through WhatsApp. She said, basically, you have to pay these taxes and  said, ‘I have to pay it, too. I’m in trouble as well. I have to find money from my friends,’” he recalled.

That’s when she suggested he ask his parents or his friends to lend him the cash.

“Are you crazy? I’m not asking anybody for $192,000. I want my money. And that’s when I knew it was a fraud.”

His case is similar to another one where two Ontario women recently lost $100,000 in a cryptocurrency scam, except in their case there was no apparent romantic element.

David said he called Montreal police after failed attempts to get his money from the website. After a couple of exchanges over a two-month period, he said he was told that the case was being handed over to the fraud department. Then, another two months later, he said he was told by an officer that there was nothing they could do.

“What he did is he gave me a private investigator’s phone number. He goes, ‘Look, try your luck with this.’ And that was it,” David said.

CTV requested an interview with Montreal police to ask why they weren’t able to assist David with his case, but they declined.

In an email, a spokesperson said the police service does not discuss its investigations due to confidentiality reasons, except for “very rare occasions.”

THE EMOTIONAL TOLL OF A ROMANCE SCAM

It’s been almost five months since he realized he was fooled and swindled out of his life’s savings and it still affects him to this day, he said.

He only gets justice in his dreams. In the real world, he’s picking up the pieces one day at a time.

“It’s a big thorn in my side and there are nights that I don’t sleep. And I’ve had to see a psychologist,” he said.

“I get a lot of anxiety, a lot of depression because of this.”

What hurts the most, he said, is that to this day he can log into the website and see his $400,000 sitting there.

“Imagine if someone stole $400,000 and they’re putting it in your face every single day and you’re telling the police, that’s where I sent it to, and they can’t do anything. That is what is killing me inside,” he said.

“That is what really hurts me the most and has destroyed a portion of my life, basically. So it’s really taken an effect. And I still can’t forgive myself for doing such a stupid thing. But people told me, my friends told me this happens everywhere. You just don’t know about it.”

CRYPTOCURRENCY FRAUD ROSE 400 PER CENT IN CANADA: RCMP

David is not alone.

Cryptocurrency fraud rose by 400 per cent between 2017 and 2020, according to RCMP. The national police force estimates that in the first eight months of 2020, Canadians lost close to $11 million in digital currency scams alone.

“A few short years ago, reports of frauds involving cryptocurrencies numbered in the hundreds (734 in 2017) and now they are over ten times that amount (7,598 for the first 8 months of 2020),” according to a RCMP news release from March.

Cryptocurrencies use strong encryption to help make transactions more secure, but the police noted this has its disadvantages.

“This makes the transfer of coins virtually untraceable and provides fraudsters with protection and anonymity from their victims. Scammers can also access the coins from anywhere in the world which further hampers their prosecution, even if they could be identified.

This is cold comfort for David, who is frustrated that the Montreal police seem to not have the resources to properly investigate cryptocurrency fraud and wonders why the RCMP or the FBI can’t get involved to assist in his case.

On Wednesday, the Hamilton Police Service announced it had partnered with the FBI in a joint investigation after a local teen allegedly stole $46 million from one person in what is believed to be the largest cryptocurrency scam in Canadian history. The investigation started in March 2020.

The Hamilton youth was charged with theft over $5,000 and possession of property or proceeds of crime.

Sue Labine, a spokesperson for the RCMP’s Anti-Fraud Centre, said David’s case is an “unfortunate” one and is part of a new trend in the world of online scams.

“For this type of scam to occur it is new that they are linking it to the romance scam. So it makes it even more easy for a victim to fall for this scam,” she said in an interview.

“Unfortunately, it’s untraceable. These scammers move very quickly and are able to remove their electronic tracings very quickly. As soon as they pull out the funds, they will move on to another platform.”

POLICE LACK RESOURCES TO INVESTIGATE ALL CYBERCRIME REPORTS: EXPERT

Steve Waterhouse, a cybersecurity expert, said he’s not surprised that Montreal police weren’t able to help David get his money back because investigating cybercrime is such a resource-intensive operation.

“By the time they just concentrate their efforts on one situation, they have 10 other cases that are popping up, and so they’ll go to the most pressing one,” said Waterhouse, an information security lecturer at Université de Sherbrooke and a former information systems security officer with the Department of National Defence.

“I believe child pornography would be much more of a priority than a crypto scam happening just by the day before.”

Montreal is not alone in lacking the necessary resources to properly investigate cybercrimes, compared to forces in other countries, like in Europe, he said.

“But when you bring it down back to here in Montreal, definitely everybody in the service, whether it’s going to be the Montreal police service or SQ (Sûreté du Québec), they do have to collaborate much more and share their resources because they’re [aren’t] a lot of people doing that.”

But things could change in a few years. The RCMP expects its new National Cybercrime Coordination Unit (NC3) to be fully operational by 2024 as part of the federal government’s National Cyber Security Strategy. The unit’s role will be to, among other things, coordinate cybercrime investigations in Canada and to collaborate with international partners to combat cybercrime.

Until then, David hopes his story will serve as a warning to other Canadians to think twice about jumping into huge financial decisions with people they meet on the Internet.

“I hope [by] me talking about this and exposing the website and … the Facebook and all this that I will stop the next person from doing this mistake,” he said, “which I’m sure is happening right now as we speak because the website is still active.”

People who think they have been a victim of fraud can contact the Canadian Anti-Fraud Centre at 1-888-495-8501 or report online at antifraudcentre.ca.


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