There are a lot of odd holidays in the calendar. My personal favourite is National Peanut Butter and Jelly Day, celebrated annually on April 2nd. It falls the day after April Fool’s Day, which, without sounding too miserable, I was never really entertained by.
The reason I discuss such wacky holidays is that I was surprised to note that March represents Fraud Prevention Month in Canada. Upon originally seeing this, I thought was a little over the top. Then, I thought about the harm fraud can cause and looked into the numbers. Based on the Canadian Anti-Fraud Centre (CAFC), $379 million were lost to scams and fraud in 2021 (up 130% from 2020) in Canada alone.
Of course, cryptocurrency is often lambasted for its wild-west terrain, which facilitates the widespread duping of consumers. While security in the space is improving, there is no getting around the fact that one still needs to be extremely prudent – CNBC reported in January that scammers made off with a colossal $14 billion in 2021. So, despite the improving security, that still represents a rise of 516% from 2020 (largely due to the growth in size of the space, especially DeFi).
To get an insider’s thoughts on fraud in crypto, we caught up with Justin Hartzman, CEO of CoinSmart, the Toronto-based cryptocurrency exchange and one of the few fully regulated trading platforms in Canada. Founded as recently as 2018, Coinsmart has grown rapidly and, as of Q4 of last year, is now a publicly traded company. Given they have come of age at the same time that crypto has breached into mainstream consciousness, they are in a unique position to opine on the scourge that is fraud in crypto.
Cointext: Coinsmart sticks to the bigger market cap coins, however there are certain exchanges who list a much more extensive selection, some of whom turn out to be scams. Do you think these exchanges should do more to vet coins before listing them, or is that for the individual investor to do?
Justin Hartzman: Absolutely, if you are in the business of providing a trading platform for cryptocurrencies, you have got to do an extensive KYP (know your product). Some of the largest exchanges don’t do a good enough job at this, exposing their users to projects that are either scams, or simply terrible investments. We try very hard to only list coins that are legitimate projects with real use cases, dedicated teams, and high liquidity.
CT: Anonymous teams are obviously quite common in cryptocurrency. Does…