Crypto Scams Reach New Heights, FBI Reports $5.6bn in Losses

Cryptocurrency-related losses totaled more than $5.6bn in 2023 with over 69,000 complaints relating to financial fraud and crypto received by the Federal Bureau of Investigation (FBI) Internet Crime Complaint Center (IC3) in 2023.

Overall losses in scams relating to cryptocurrency increased 45% since 2022.

IC3’s latest report shows that the exploitation of cryptocurrency was most widespread in investment scams, where losses accounted for almost 71% of all losses related to cryptocurrency.

Losses from cryptocurrency-related investment fraud schemes reported to the IC3 rose from $2.57bn in 2022 to $3.96bn in 2023, an increase of 53%.

The IC3 report noted that investment fraud typically involves a deceptive practice to induce investment based on false information, offering individuals large returns with the promise of minimal risk.

Other top crime times with a cryptocurrency nexus included personal data breaches, over $494m in losses, tech support, over $420m in losses, and romance scams, which saw losses of over $215m.

Phishing scams accounted in over $9m in losses and business email compromise with a connection to crypto saw losses in excess of $4m.

US citizens in California, Florida and Texas issued the highest number of complaints to IC3. Losses in California were reported to be over $1bn.

The top three countries by complaint count were the US (57,762), Canada (1236) and the UK (962).

What to Do if You Are the Target of a Cryptocurrency Scam

IC3 set out recommendations for individuals who believe they have been the target of a cryptocurrency scam. These include:

• Submit a complaint through IC3.gov, even if financial loss did not occur
• Provide details of the transactions in the complaint including cryptocurrency addresses; the amounts and types of cryptocurrencies; transaction hashes; and the dates and times of the transactions
• Share details about how you met the scammer, platforms used to communicate and any web domains involved in the scheme
• Be wary of f cryptocurrency recovery services, especially those charging an up-front fee
• Individuals aged 60 or older can contact the National Elder Fraud Hotline (833-372-8311) to assist with filing an IC3 complain

The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals, while creating challenges to recover stolen funds, the IC3 report noted.

Once an individual sends a payment, the recipient owns the cryptocurrency and often quickly transfers it into an account overseas for cash out purposes.

Rapid and accurate complaint reporting are key to assisting law enforcement in investigating fraud schemes that exploit cryptocurrencies.