OSC Warns of Surge in AI-Driven Crypto Scams as Canadian Fraud Losses Climb to $640 Million

Speaking during the Commission’s annual event on Thursday, OSC Chief Executive Grant Vingoe warned that fraud in the crypto space is intensifying, with bad actors leveraging deepfake technology and bogus trading platforms to exploit regulatory loopholes. He described the current landscape as “traditional norms are not being observed as they have in the past,” blaming global instability and weakening financial trust for fueling unethical practices.

“There’s more scams, more fraud, more insider trading, more corruption, enabled by an atmosphere in which anything goes,”

Vingoe said, pointing to the unpredictable geopolitical climate as a breeding ground for misconduct.

According to recent data from the Canadian Anti-Fraud Centre, nearly $640 million in investor losses were reported in 2024 alone—an alarming figure that underscores the urgent need for stricter oversight.

The OSC’s Executive Vice-President of Enforcement, Bonnie Lysyk, emphasized the Commission’s renewed focus on pursuing “high-impact cases” and building preventive strategies to intervene earlier in the fraud cycle.

“The crypto space is ripe for fraud,”

she stated, underscoring the importance of cracking down before scammers can fully exploit their targets.

Canada began stepping up its crypto regulations in February 2023. The Canadian Securities Administrators (CSA) required all crypto platforms operating in the country to sign pre-registration undertakings, effectively binding them to new legal obligations. The CSA also banned margin trading and placed strict limits on the distribution of stablecoins, many of which it classifies as securities or derivatives.

These evolving regulatory measures have made operating within Canada increasingly difficult for some platforms. At the same time, the OSC continues to call for heightened vigilance and more vigorous enforcement to protect investors from emerging threats.

In January, Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) issued a severe warning regarding the increasing use of cryptocurrencies to launder proceeds from synthetic fentanyl and opioid trafficking.

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