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FBI Criminal Investigative Division reports Americans lost over $5.6B to crypto scams in 2023
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FBI Criminal Investigative Division reports Americans lost over $5.6B to crypto scams in 2023

2024-09-10 by Ndaman Olayinka 7 minutes read
FBI Criminal Investigative Division reports Americans lost over $5.6B to crypto scams in 2023

The Federal Bureau of Investigation released data showing that in 2023, Americans lost $5.6 billion as a result of cryptocurrency scams. Comparing 2022 to now, that is 45% higher. The FBI received almost 700,000 reports of cryptocurrency fraud last year; of the lost money, $3.96 billion came from investment fraud. 

More than 69,000 public complaints about financial fraud involving the use of cryptocurrency, such as bitcoin, ether, or tether, were received by the Federal Bureau of Investigation's (FBI) Internet Crime Complaint Center (IC3) in 2023. Although the percentage of complaints about cryptocurrency is only around 10% of all financial fraud complaints, the losses resulting from these complaints make up nearly 50% of all losses.

The most common way that cryptocurrencies were exploited was through investment scams, where losses made up nearly 71% of all losses associated with cryptocurrencies, the FBI said. Approximately 10% of cryptocurrency losses were mainly due to call center frauds, which include tech/customer support scams and government impersonation scams.

From the data, the state with the highest crypto loss to fraudsters is California, losing about $1,155,315,595, followed by Texas, Florida, New York, New Jersey, Illinois, Washington, Arizona, Pennsylvania, Virginia, and others. The FBI also received 9,522 public complaints about financial fraud involving the use of cryptocurrency from residents in the state of California, which sits at the top for the 2023 overall state statistics.

Victims in more than 200 countries filed complaints with the IC3 in 2023 that had something to do with cryptocurrencies. The United States of America tops the list with 57,762 complaints, followed by Canada, the United Kingdom, Nigeria, and India. Nigeria and South Africa happen to be the only two African countries in the top 20 countries by complaint count.

FBI Report on Investment Fraud in 2023

Losses from investment fraud schemes involving cryptocurrencies that were reported to the IC3 increased by 53% from $2.57 billion in 2022 to $3.96 billion in 2023. Large debt loads have been incurred by numerous people in order to offset losses resulting from these phony investments.

Around 5,200 complaints about cryptocurrency investment fraud were filed by people in the 30- to 39- and 40- to 49-year-old age groups, respectively. However, complaints from people over 60 years of age reported the largest losses—more than $1.24 billion.

Investment fraud entails using dishonest tactics to persuade people to invest money using false information. These schemes promise low risk in exchange for substantial returns for individual investors.

The widespread promotion of cryptocurrencies as investment vehicles over the years, along with the "fear of missing out" mentality, has created opportunities for criminals to prey on consumers and retail investors, especially those who want to profit from investing but are not familiar with the technology and the associated risks.

Despite the fact that there are numerous varieties of cryptocurrency-related investment fraud, one particular type of fraud gained significant attention in 2023: confidence-enabled cryptocurrency investment fraud. Through socially engineered and trust-enabled schemes, offenders build relationships with their targets through the use of encrypted messaging apps, professional networking sites, social media platforms, and dating applications.

Once confidence is gained, criminals discuss investing in cryptocurrency. Criminals make claims to possess knowledge or to know someone with knowledge that can assist prospective investors in becoming wealthy. Then, fraudsters trick their victims into using fake websites or apps that they own to make cryptocurrency investments.

The report further said that fraudulent companies that promise to assist in recovering lost cryptocurrency funds occasionally target individuals who report losing money to these schemes. They reach out to individuals who have lost money through social media or messaging apps, or they promote their phony cryptocurrency recovery services in social media posts, online search results for cryptocurrency, and comment sections of online news articles and videos.

The use of cryptocurrencies by criminal actors is growing along with their use in the global financial system. Due to its decentralized structure, rapid irreversible transaction speeds, and global value transfer capabilities, cryptocurrencies are a tempting option for criminals and make it more difficult to recover stolen funds.

The recipient of a payment becomes the owner of the cryptocurrency after it is sent, and they frequently move it fast into an account abroad so they can cash out. In order to help law enforcement look into fraud schemes that take advantage of cryptocurrencies, timely and accurate complaint reporting is vital.

James Barnacle, the deputy assistant director of the FBI's Criminal Investigative Division, told ABC News that when the FBI finds out that someone was a victim of fraud, it notifies the person. 75% of the 3,000 people we've notified this year were unaware they were victims of fraud.

The risk of labor trafficking was also brought to light in the report. This involves luring workers into exploitative jobs overseas, frequently in call centers that conduct "pig butchering" schemes.

Call centers employing foreign labor are frequently the hubs of pig butchering scams. Workers' passports and other documents may be seized by employers, who may also demand reimbursement for living expenses incurred during the employment, such as room and board.

Other common fraudulent activities included so-called "play-to-earn" scams, in which victims are tricked into paying for tokens for virtual games before their wallets are frozen, and fraudulent cryptocurrency recovery services that prey on those who have already lost money.

Disclaimer: This information should not be considered financial advice by any means. Please do your own research before making any investment decisions. The views in the articles are personal opinions only. Whale Insider is not responsible for any financial losses incurred.