ScamShield: Investor Protection Challenge

This challenge seeks innovative and actionable solutions that can be successfully implemented to reduce victimization from a particularly devastating type of scam affecting Albertans. 

Online crypto investment fraud has skyrocketed in Alberta and globally. These scams typically start on social media platforms, messaging apps, text message, or websites. Scammers connect with victims, build trust, and lure them with the promise of lucrative crypto investment opportunities. Victims are enticed to 'invest' through fraudulent platforms or websites controlled by the scammers and are misled about their returns. When they attempt to withdraw their funds, they discover the harsh reality—their investments were illusions, and their money is gone.

This is where you come in...

The Alberta Securities Commission (ASC) recently highlighted the most prevalent crypto-related scams of 2024, revealing a landscape where fraudsters leverage technology and psychological manipulation to deceive investors. We are looking for solutions that can be implemented to accomplish one or more of the following: prevent victimization, detect scams, deter scammers, disrupt scammers or the scam cycle, reduce harm, and educate investors. Enforcement opportunities and tactics are being explored in other venues and will not be considered in this challenge.

The scam cycle is continually evolving but here are some common aspects:

Initial contact:

• Scammers create fake profiles on dating apps, or messaging platforms, often posing as attractive and successful individuals.
• Scammers also take out paid advertisements on social media sites offering investment opportunities with great results, including through use of technology or artificial intelligence.
• Scammers may contact victims directly through text message purportedly looking for a different person with the intention of striking up a text conversation and often the conversation is moved to encrypted messaging platforms, such as WhatsApp.

Scam progression and technology used:

• Scammers spend days, weeks or months gaining the victim's trust and at times, affection.
• They avoid meeting in person and may use edited photos, AI-generated, or publicly available images for their fake profiles.
• Voice/video calls are postponed with excuses.
• AI chatbots may be used to maintain multiple scams and generate convincing responses.

Introduction of crypto "investment opportunity":

• Once trust is established, the scammer brings up crypto assets and cryptocurrency, touting their success and offering to teach the victim how to invest.
• The investment methodology varies, in some cases victims are directed to invest through a fraudulent crypto trading platform/app controlled by the scammers.
• In other cases, a legitimate crypto trading platform may be used in conjunction with a fraudulent crypto asset or coin.
• Profits are fabricated, encouraging victims to invest more.

Transfer of funds to scammers:

• Transfer of fiat currency to crypto assets can happen in a number of ways.
• In some cases, scammers provide wallet addresses and guide victims to purchase crypto on exchanges and then transfer it to them.
• Victims may also be tricked into granting access to their wallets by signing malicious smart contracts.
• Victims may be able to withdraw small amounts initially, as a tactic by the scammers to build the victim’s trust.
• When victims attempt to withdraw funds, they experience delays, excuses or may be told they need to pay taxes or fees before they can make a withdrawal.  The money has already been stolen.

Where the stolen funds go:

• Funds ultimately ends up in criminal's hands, funding criminal enterprises.

The scammers behind the schemes:

• Many of these scams originate from Southeast Asia, operating in countries like Cambodia, Laos, and Myanmar.
• Scammers use victims of human trafficking, forced to work for large crime syndicates that run sophisticated global operations.

Here are some links that expand on these scams:

Investigating the con that combines romance scams and crypto fraud (CBC Marketplace)     https://www.youtube.com/watch?v=nDg2z8QPuWc  

Human trafficking victims tortured into scamming innocent people (60 Minutes Australia)

https://youtu.be/7b7JAX03x2Q?si=eJzSdxrljCI0xc1c 

Pig Butchering Scams: Last Week Tonight with John Oliver (HBO)

https://youtu.be/pLPpl2ISKTg?si=toum3CpO0LiFuqQZ 

Current solutions and their limitations

We're looking for bright minds and bold ideas to develop new strategies that can protect investors and disrupt the scammers' tactics. Whether you're an individual with a groundbreaking idea or a team with a leading-edge solution, this challenge offers a unique opportunity to make a real difference in the fight against online crypto investment scams.

Existing considerations

While current solutions to identify fraudulent crypto investment websites exist, these tools are often costly and demand continuous adaptation to keep pace with evolving scam tactics.  The identification of fraudulent websites requires an effort to remove them through internet registries or domain hosts by request. We invite participants to explore new methodologies, collaborations, or technologies that can integrate with, or improve upon, current systems to protect investors more efficiently and economically. Your solution could involve novel partnerships, leveraging existing data in creative ways, or developing tools that empower investors directly. We encourage you to think beyond traditional  frameworks to effectively disrupt and deter online crypto investment fraud. 

Traditional awareness campaigns, frequently considered a prevention tactic, may have limited success in altering behaviors and reducing instances of fraud according to a recent study. This presents a critical opportunity to redefine how to educate and engage the public about crypto investment fraud. We are not seeking conventional mass media outreach strategies. Instead, this challenge invites innovative solutions that could include interventions that are effective at the individual level. We encourage participants to consider how to create targeted, impactful educational experiences that drive behavioral change and reduce the risk of online crypto investment fraud. 

Current challenges

There are several opportunities participants may consider.

Enhancing Coordination and Connectivity: Foster collaboration among government entities, law enforcement, regulators, technology companies, the financial sector, registered crypto exchanges, and victim services organizations to develop comprehensive solutions.

Facilitating Information Sharing and Analysis: Create platforms and protocols for seamless information exchange between government, industry, and similarly-mandated agencies to achieve real-time understanding of scam trends and respond effectively to evolving tactics.

Developing Advanced Reporting Systems: Innovate and implement integrated reporting systems to bridge the gap in timely scam identification and response within Alberta and Canada, ensuring cohesive communication among reporting, enforcement, private sector, and victim support agencies.

Managing Information and Enhancing Human Behaviour: Design educational programs and tools that empower individuals to recognize and avoid scams 'just in time,' aligning scam awareness with actionable identification strategies to prevent victimization.

Market opportunity

Beyond the immediate challenge, there is a significant market demand for solutions that reduce investment fraud. Innovators who rise to this challenge will not only contribute to a safer financial landscape but also tap into a vast, growing market that needs effective fraud prevention measures.

Phase 1: Ideation and proposal submission
Objective

The primary objective of this phase is to review the actionable proposals submitted by Innovators. Simplistic solutions with no evidence of effectiveness or a reasonable expectation of success, will not advance to phase two. Examples of simplistic solutions:

“Create a public awareness campaign about online crypto investment fraud.”

“Make social media companies take down ads that are connected to online crypto investment fraud.”

While each of these examples contain valid objectives, this challenge is seeking solutions that include a rationale and roadmap for implementation within a reasonable timeframe.  

Participation

• Open to all interested parties, including individuals, teams, startups and established companies.
• Encourages submissions from both technical and non-technical teams, provided their solution can be rigorously evaluated in phase two.

Submission requirements

• Detailed description of the proposed solution, including its innovative aspects and how it addresses the challenge.
• Explanation of the solution's feasibility, scalability, cost, and potential impact.
• Preliminary evidence or reasoning to demonstrate the solution's viability.
• For commercially available solutions, a proposal for licensing instead of prize money may be considered.

Phase 2: Enhanced evaluation - Finalists

Objective

Phase two will involve an enhanced evaluation of the top submissions, or finalists, with a preference for those that can be implemented in a reasonable time frame. This may include but is not limited to a product demonstration, presentation, or a Q&A with the judges. Participants are free to propose an innovative method to facilitate an enhanced evaluation of their submission. The methodology for the enhanced evaluation phase may be refined based on the content of the top submissions, and is subject to change.  The judging and scoring criteria is described in the FAQ section.

Please note that if your submission is selected as a finalist, and you have no plan or roadmap for implementation, the Challenge Sponsor may ask you to either:

1. Provide a royalty-free, non-exclusive license for some or all of your intellectual property, or
2. Transfer some or all of your intellectual property rights to the Challenge Sponsor.

This would allow the Sponsor to use your idea or concept for commercial purposes. If you choose not to agree, you won’t be eligible to receive a prize.

Challenge timeline

Launch date:                                                               September 4, 2024

Challenge submissions are due:                          November 4, 2024

Phase 1 challenge judging:                                     October 29 – November 8, 2024

Phase 2 challenge judging:                                    November 12 - December 13, 2024

Challenge winner(s) announced:                        January 17, 2025

 What’s in it for you?

• Up to a total of $130,000 CAD for the winning solution(s) that can be implemented by the Innovator(s) in a reasonable time frame.
• Significant contribution toward safeguarding the financial wellbeing of Albertans through innovation and cooperation.  
• If an existing application is available, suitable and mutually-agreeable commercial terms may be negotiated in lieu of prize money.

What’s in it for the ASC, Edmonton Police Foundation and the Community Solutions Accelerator?

• The most direct and impactful beneficiaries of this challenge are the citizens of Alberta. The development of effective solutions to combat crypto investment scams directly contributes to the public’s well-being by reducing victimization and financial losses. 
• The initiative raises public awareness about the nature and tactics of investment scams, contributing to a more informed and vigilant community. It will also empower individuals with the knowledge and tools to navigate the investment ecosystem. 
• This challenge aligns with the ASC and EPF CSA’s shared desire for the safety and wellbeing of Albertans. It supports the ASC’s mission of fostering a fair and efficient capital market and protecting investors. It also aligns with the EPF CSA primary objectives of diminishing harm to individuals and disrupting and decreasing crime. 
• Encouraging the development of innovative solutions to address online crypto investment scams, the ASC and EPF build public trust in our commitment to safeguarding the financial well-being of Albertans. 

Stakeholders

• Alberta Securities Commission 
• Edmonton Police Foundation 
• Edmonton Police Service

If you have any questions about the ScamShield: Investor Protection Challenge, please email .