Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

FBI Report Says Cryptocurrency Scams Surged in 2023

Cryptocurrency scams skyrocketed across the United States in 2023, the FBI said Monday, as victims reported $5.6 billion in financial losses - a 45% increase from the previous year.

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The FBI's Internet Crime Complaint Center received more than 69,000 public complaints related to cryptocurrency fraud, while investment scams involving bitcoin and other virtual currencies accounted for nearly 71% of total losses, according to crime statistics. While most complaints came from Americans over the age of 60, senior FBI officials said that people aged 30-39 were also hit hard by a significant surge in crypto-related financial fraud.

"Fraudsters will try to build a rapport with victims over time," a senior FBI official said during a briefing on the report, adding that criminals initially target unsuspecting victims through social media, email or text messages before moving the conversation to encrypted platforms such as WhatsApp.

Call center frauds -including tech support, customer support and government impersonation scams - accounted for nearly 10% of cryptocurrency-related financial losses, according to the bureau. Meanwhile, cryptocurrency losses from financial fraud have continued to soar year after year since 2021. Most complaints come from California, Florida and Texas.

While investment scams made up the bulk of losses in 2023, personal data breaches, ransomware, phishing campaigns and other financial crimes also led to billions in losses. The FBI said that criminals exploited every type of scheme tracked by the Internet Crime Complaint Center to perpetrate cryptocurrency-related fraud.

Criminals have increasingly exploited cryptocurrency due to its decentralized nature and ease of completing irrevocable transactions anywhere in the world "without traditional financial intermediaries that employ anti-money laundering programs." Law enforcement also faces significant challenges in tracing cryptocurrency transactions that are transferred to exchanges overseas.

The use of cryptocurrency kiosks - ATM-like electronic machines that allow users to exchange cash for crypto - have been increasingly used in financial fraud schemes, according to the report. More than 5,500 complaints filed to the FBI involved the use of cryptocurrency kiosks, totaling over $189 million in losses.

The report includes tips to protect from cryptocurrency-related fraud, such as verifying the validity of any investment opportunity online. "If an investment opportunity sounds too good to be true, it likely is," the report says.