US Citizens Lost $5.6 Billion To Cryptocurrency Scams In 2023, Reports FBI
A new report from the FBI reveals that American citizens lost over $5.6 billion to cryptocurrency fraud in 2023, marking a significant surge from previous years.
The FBI’s Internet Crime Complaint Center (IC3) received more than 69,000 complaints related to cryptocurrency fraud, marking a 45 percent increase in losses compared to the prior year, according to the report released on September 9.
Cryptocurrency Fraud Accounts For Half Of All Financial Losses
Cryptocurrency-related complaints constituted 10 percent of the total number of financial fraud complaints, yet they accounted for nearly half of all financial losses reported to the FBI.
Michael Nordwall, assistant director for the FBI’s Criminal Investigative Division, noted in the report, “As the use of cryptocurrency in the global financial system continues to grow, so too does its use by criminal actors.”
Investment Fraud: The Major Contributor
Investment fraud was the main contributor to these losses, accounting for $3.96 billion, or 71 percent of all cryptocurrency-related losses. The report highlights that investment fraud scammers often use social media platforms, dating apps, and networking sites to build trust with victims before persuading them to invest in fake cryptocurrency schemes.
These scams often involve showing victims fake profits to encourage further investments. However, when the victims attempt to withdraw their funds, they are asked to pay additional fees or taxes, which they never recover.
Other Forms Of Fraud
Other forms of fraud, including tech support scams, government impersonation, and call center fraud, were also significant. Call center fraud represents approximately 10 percent of cryptocurrency-related losses.
An example of tech support scams involves criminals impersonating customer support representatives and directing victims to pay for nonexistent services using cryptocurrency.
Nordwall explained, “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.”
Older Americans Hit Hard By Cryptocurrency Scams
The surge in cryptocurrency scams has particularly impacted older Americans. While people over the age of 60 made up just 24 percent of the total complaints, they reported the highest financial losses, totaling $1.65 billion.
Younger generations were less affected, with those under 20 losing $14.7 million, followed by those in their 20s losing $168.5 million, those in their 30s losing $693.7 million, those in their 40s losing $843.8 million, and those in their 50s losing $901 million.
States Most And Least Impacted By Scams
Some states were more affected by scams than others. The top five states for cryptocurrency fraud losses were California ($1.15 billion), Texas ($411.9 million), Florida ($390.2 million), New York ($317.3 million), and New Jersey ($179.4 million).
The five least impacted were Vermont ($4.8 million), Maine ($5.9 million), North Dakota ($6.5 million), Wyoming ($7.3 million), and the District of Columbia ($8.3 million).
Protecting Yourself From Cryptocurrency Scams
The report provides several tips for individuals to protect themselves from cryptocurrency scams. It stresses the importance of verifying the legitimacy of investment opportunities, particularly when offered by people met online or through unsolicited contacts.
The FBI advises against sending cryptocurrency payments to individuals or companies without thoroughly researching them. People are also urged to be wary of companies claiming they can recover lost cryptocurrency, as many of these services charge up-front fees and may be fraudulent themselves.
The agency encourages victims to file complaints with IC3, even if no financial loss occurred. For further protection, victims should promptly report any suspicious activity to the IC3. The FBI emphasized the importance of timely and accurate reporting in helping law enforcement track and recover lost funds.
Bottom Line
The alarming increase in cryptocurrency scams, as reported by the FBI, underscores the need for caution and thorough research when dealing with cryptocurrency transactions. It's crucial to verify the legitimacy of investment opportunities and to be wary of unsolicited contacts. The report also highlights the importance of timely reporting to aid law enforcement in tracking and recovering lost funds. What are your thoughts on this issue? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
