BCSC-led effort disrupts crypto fraud

Securities regulators and law enforcement agencies across Canada collaborated in Operation Avalanche to disrupt an international crypto fraud between March 11 and 12, according to a British Columbia Securities Commission (BCSC) release Thursday.

The BCSC-led effort found compromised Ethereum blockchain wallets belonging to 89 victims, contacted them by phone or email and informed the victims of the threat so they could prevent further losses.

As the fraudsters were abroad and beyond the reach of Canadian law enforcement, regulators and police had to disrupt the illegal activity by alerting victims as the con unfolded, Lori Chambers, the BCSC’s deputy director of enforcement, said in a release. “Even if we don’t catch the perpetrators, anything we can do to make their life harder is worthwhile.”

The regulator did not say where the fraudsters were from.

Operation Avalanche focused on “approval phishing,” where victims are tricked into granting access to a wallet on the Ethereum blockchain and often unknowingly let the fraudster withdraw crypto from their wallet.

The Ethereum blockchain shows which wallets have granted such permission. Although there can be legitimate reasons to grant access to a wallet, it is usually part of a long-term online investment fraud. The blockchain addresses identified were drained of about $4.3 million of crypto assets.

BCSC plans to use the techniques developed from Operation Avalanche to proactively alert victims of fraud regularly.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.