Canada's York Regional Police have warned citizens against a Bitcoin tax scam after fraudsters victimized more than 40 residents in the area. The perpetrators claimed to be employees of the Canada Revenue Agency (CRA). They allegedly issued threats of possible arrest for unpaid taxes if the victims failed to send funds through Bitcoin automated teller machines (ATM).

According to York Police Detective Rob Vingerhoets, the victims lost a total of up to CA$340,000 ($267,000) in the scam.

He, however, claimed that the Bitcoin ATMs are “legal” and the identification of the perpetrators of the scam or the recovery of the lost money could be very hard but still possible.

"There really isn't anything at this point, it's a one way street. The only way to recover it would be for the person who received the Bitcoins to send them back… If they're a criminal, they're not likely to do that."

Police efforts to prevent the scam

Vingerhoets added that there has been a growing number of reported cases of similar scams in the past few months. Because of their limited capability to combat such crimes, he claimed that their main strategy is to increase public awareness about said scams.

"Our main strategy, ... [is] to stop people from becoming victims in the first place."

The York Police have reportedly put flyers near Bitcoin ATMs to inform the public about the potential scams and how to avoid them.

Meanwhile, the Durham Regional Police Service in Ontario issued a warning to citizens about the proliferation of fraudulent investment schemes involving the leading virtual currency Bitcoin.

Part of the warning reads:

"Residents have reported being contacted by fraudsters after applying for jobs or responding to ads online involving a promise to make money. The fraudsters send cheques to the victims and ask them to use the money to purchase bitcoins – a virtual currency used globally."