The B.C. Securities Commission announced Wednesday it has uncovered a scheme believed to have been orchestrated by overseas crime groups.
“Our traditional method of investigating, prosecuting and sanctioning won’t work for these scammers, who are often organized crime groups operating in other countries, largely beyond our reach,” Lori Chambers, the BCSC’s deputy director of enforcement, said in a news release.
So-called “Operation Avalanche” was conducted by the securities regulator and other law enforcement agencies to unpack a specific tactic used by online fraudsters called approval phishing.
In this instance, online fraudsters tricked investors into granting them access to their cryptocurrency wallets on the Ethereum blockchain.
The blockchain addresses identified during the operation were drained of crypto assets worth an estimated $4.3 million. The BCSC said 89 victims were contacted by telephone or email.
The commission announced no sanctions, orders or charges.
The commission said it worked with blockchain transactions analytics firm Chainalysis to find victims.
If Chainalysis determined that the cryptocurrencies for a compromised wallet came from one of the crypto trading platforms participating in Operation Avalanche, regulators notified the specific trading platform.
The platform then provided account holders’ contact information to commission investigators and police sitting alongside them, according to the BCSC, which said it is now working on a proactive warning system for investors.
Platforms must be registered to a Canadian securities regulator in order to legally provide services to Canadians.
The participating platforms, all of which are registered to operate in Canada, were: Netcoins Inc., Ndax Canada Inc., Coinbase Canada Inc., Wealthsimple Investments Inc. and Shakepay Inc.
Operation Avalanche included the Alberta Securities Commission, the Autorité des marchés financiers, the Ontario Securities Commission, the Delta Police Department, the Vancouver Police Department, the RCMP and the U.S. Secret Service
Members of the public are encouraged to visit bcsc.bc.ca/OperationAvalanche to learn more about crypto investment fraud.
