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For Fraud Prevention Month this March, the Canadian Securities Administrators (CSA) is reminding Canadians, in a press release dated March 11, 2022, to do their own research and ask questions before investing in crypto assets. Increased knowledge can help investors make informed decisions, reduce the risk of losses and avoid crypto investment scams.

The CSA is launching a bilingual campaign on TikTok that encourages Canadian investors to ask themselves a series of questions to ensure an investment is right for them and to avoid investment fraud.

“The crypto landscape is evolving and complex. Fraudsters capitalize on market interest as well as a lack of knowledge in crypto assets to lure both sophisticated and potential investors into scams that can lead to devastating losses,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marches financiers. “Asking questions, conducting research about potential crypto opportunities, and making sure you deal with registered platforms are among the best ways to protect yourself from potentially fraudulent investment activities.”

Questions to ask before making a crypto asset investment include:
• Does investing in this crypto asset align with my financial goals and time horizon?
• Do I understand what I am investing in?
• Can I afford to lose the money I’m willing to invest in crypto assets?
• Am I investing for the wrong reasons, such as fear of missing out, urgency from others, promises of guaranteed returns, exclusive offers and, supposed cutting-edge investment opportunities?
• Have I considered the high-risk nature of investing in crypto assets and whether it fits my investor profile?
• Is the crypto asset I am considering deemed a security or derivative and subject to securities law?
• Does the crypto asset trading platform I plan to use hold custody of my crypto assets? Is it registered to do so?

Across Canada, CSA members are also running initiatives to highlight the importance of researching investments, checking registration through the CSA’s National Registration Search and being familiar with the red flags of fraud before investing their money.

To find out which provincial regulator is doing what, go to Fraud Prevention Month: Canadian Securities Administrators encourages Canadians to invest in asking questions before investing in crypto assets - Canadian Securities Administrators (securities-administrators.ca).

Canadian Securities Regulators Issue Statement Regarding Amended Special Economic Measures (Russia) Regulations

The CSA is also alerting market participants to economic sanctions imposed by the Government of Canada recently under amendments to the Special Economic Measures (Russia) Regulations. These Regulations were amended in light of Russia’s violation of the sovereignty and territorial integrity of Ukraine.

The Regulations impose broad categories of sanctions on named Russian nationals and Russian entities. While the sanctions apply beyond the scope of Canadian securities law, all market participants are potentially affected, including issuers, marketplaces, clearing agencies, custodians, all categories of registrants, including crypto asset trading platforms, and pension, investment and mutual funds and their managers. Additionally, other entities such as banks and accounting firms that facilitate relevant transactions, or provide financial or audit services in relation to relevant transactions or designated persons, may be affected.

“All market participants are encouraged to do their due diligence and consider obtaining expert advice to understand, follow and continually monitor their obligations under the Regulations,” the Alert states. “The Regulations impose wide-ranging restrictions in a number of areas. It is prohibited for any person in Canada and any Canadian outside Canada to:
• Deal in any property, wherever situated, held by or on behalf of a designated person whose name is listed in Schedule 1 of the Regulations.
• Enter into or facilitate, directly or indirectly, any transaction related to such a dealing.
• Provide any financial or other related services in respect of such a dealing.
• Make any goods, wherever situated, available to a designated person listed in Schedule 1.
• Provide any financial or related service to, or for the benefit of, a designated person listed in Schedule 1.”

It is important to note that some restrictions will impact certain sectors, such as the financial and energy sectors. According to the news release, “it is also important to note that causing, facilitating or assisting in prohibited activities is likewise prohibited. For further information on the Regulations, including any exceptions to the broad provisions, we strongly suggest that market participants review the amended Special Economic Measures (Russia) Regulations and keep apprised of any ongoing changes.”

For more, see Canadian securities regulators issue statement regarding amended Special Economic Measures (Russia) Regulations | ASC.