Be careful with crypto, WPS cyber-fraud investigator warns potential investors

Be careful with crypto, WPS cyber-fraud investigator warns potential investors

Winnipeg police investigators recovered most of the cash one recent cryptocurrency scam victim lost, but warn such frauds are tough to track.

Winnipeg Police Service Det. Sgt. Blair Savinkoff, an investigator in the financial crimes unit who specializes in cryptocurrency and other cyberscams, said city police are equipped with technical tools that can track the digital currencies, which are exchanged online without relying on authorities such as banks or governments.

“It’s extremely difficult,” said Savinkoff.

“A lot of times, cryptocurrency’s anonymous, and we don’t know who owns specific addresses or wallets, but there is certain points where people have to identify themselves — those are the points that we look for in order to secure the assets.”

One recent Winnipeg victim had been duped in a cryptocurrency investment scam over three months and reported it last October.

The victim bought 5.806 Bitcoin which, at the time, was worth about $168,000, and was told how to “invest” the funds over three months.

Cyber investigators, including Savinkoff, began a probe and found that most of the Bitcoin had been transferred overseas and converted to another kind of cryptocurrency, Tether.

Investigators managed to recover $155,000 worth of cryptocurrency in October and returned it to the victim, Savinkoff said.

He would not reveal where exactly the fraudster is located, but said in this case, investigators identified a suspect from outside Canada.

“With this person being in a different country, it becomes extremely challenging to make any arrests. So no arrests have been made but we believe at this point it’s one individual,” he said.

That’s where other police agencies will come in.

“In the cyber and cryptocurrency world, there’s certain relationships that we make with other agencies, whether that be local, national or international, and sometimes we rely on those relationships in order to gain assistance,” said Savinkoff.

Savinkoff said cryptocurrency fraudsters rely on classic confidence tricks to first lure victims by talking to them over days or, in some cases, months to gain their trust.

“The most common and the most lucrative for the fraudsters is investment scams, because for whatever reason they’re able to convince a huge number of people that they’re legitimate and to actually send funds to them,” said the investigator.

“They’re utilizing techniques that make it appear as though people are making money, so they’re sending them more and more, until it gets to a certain point, and this changes within every individual, at a certain point people realize that something’s not right here, and, ‘I’m not getting my money back.’”

That can include using fake software, which makes it appear as though the funds are in a legitimate, growing investment account.

Savinkoff said city police have four main investigators, including him, who focus on cryptocurrency scams. They began working on the file about two years ago.

In 2020 and 2021, cryptocurrencies soared in value — with significant attention in the media — and city law enforcement saw a big uptick in frauds related to them, police have said.

Savinkoff suggested anyone interested in the cryptocurrency market should be extremely wary of cold-callers, particularly those from the internet.

“What I would suggest is somebody utilize a Canadian exchange that’s trustworthy, or any exchange in the world that’s trustworthy, and then go and purchase coins through there, and then you have an account with that exchange,” he said.

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Twitter: @erik_pindera