An advertisement for Bitcoin, one of the cryptocurrencies, is displayed on a building in Hong Kong, on Nov. 18, 2021. The Nova Scotia Securities Commission is warning residents about a cryptocurrency scam that has so far cost Nova Scotians hundreds of thousands of dollars in total. THE CANADIAN PRESS/AP-Kin Cheung

HALIFAX - The Nova Scotia securities regulator is warning about a cryptocurrency scam that has so far cost residents hundreds of thousands of dollars.

Nova Scotians should be wary of this so-called "pig-butchering" scheme, which starts with unsolicited messages or advertisements recommending investment in crypto assets, Paul Radford, chair of the Nova Scotia Securities Commission, said in a statement Monday.

These messages, he said, can be sent on social media or through texts and emails. Typically, victims are persuaded to open and deposit money into crypto-trading accounts; then they are sent fake account statements showing large gains.

"These are fake documents as the scammer has not actually used the money to purchase crypto," the statement from the regulator said.

Victims are tricked into thinking their investments are making money, and are encouraged to invest more -- a strategy the regulator said is called "fattening up the pig."

When victims attempt to withdraw money, the scammers demand additional fees then stop responding, the regulator said, adding that very little can be done to recover lost funds. Commission spokesperson David Harrison said in an email that since the fall, more than 20 Nova Scotians have reported losing a total of about $750,000.

Radford said, "While there are always fraudsters inventing new schemes, these so-called 'pig-butchering' scams involving crypto assets have become very prevalent and are claiming many victims, many with very large losses."

Scammers are also likely to instruct victims to download trading applications or file-sharing software, granting criminals access to victims' personal and financial information, which can be used to steal more money.

Radford said that regulators in North America believe more than $1 billion has been lost to crypto scammers since 2021.

The regulator is also warning that these victims are often contacted again by the scammer, who poses as someone who can retrieve lost money for a fee. This so-called "recovery scam" results in further stolen funds, the statement said.

This report by The Canadian Press was first published Jan. 9, 2023.

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This story was produced with the financial assistance of the Meta and Canadian Press News Fellowship.

News from © The Canadian Press, 2023