Americans lost more than $5.6 billion to cryptocurrency fraud in 2023, a significant increase from previous years, according to a new report from the FBI.
The FBI’s Internet Crime Complaint Center (IC3) received more than 69,000 complaints involving cryptocurrency fraud, representing a 45 percent increase in losses compared to the previous year, the Sept. 9 report said.
While these cryptocurrency-related complaints accounted for 10 percent of the total number of financial fraud complaints, they made up nearly half of all financial losses reported to the FBI.
“As the use of cryptocurrency in the global financial system continues to grow, so too does its use by criminal actors,” Michael Nordwall, assistant director for the FBI’s Criminal Investigative Division, said in the report.
According to the report, investment fraud was the most significant contributor to these losses, accounting for $3.96 billion, or 71 percent of all cryptocurrency-related losses.
The report cites investment fraud scammers who use social media platforms, dating apps, and networking sites to build trust with victims before convincing them to invest in fake cryptocurrency schemes.
These scams often involve showing victims fake profits to encourage further investments, but when the victims try to withdraw their funds, they are asked to pay additional fees or taxes, which they never recover.
Other forms of fraud, including tech support scams, government impersonation, and call center fraud, were also notable. Call center fraud represents approximately 10 percent of cryptocurrency-related losses.
An example of tech support scams is criminals impersonating customer support representatives and directing victims to pay for nonexistent services using cryptocurrency.
“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,” Nordwall said.
“Once an individual sends a payment, the recipient owns the cryptocurrency and often quickly transfers it into an account overseas for cash-out purposes.”
The rise in cryptocurrency scams has hit older Americans especially hard. 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 hit less hard, 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.
Some states were hit harder 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).
The report offers several tips for individuals to protect themselves from cryptocurrency scams. It emphasizes the importance of verifying the legitimacy of investment opportunities, especially when offered by people met online or through unsolicited contacts.
The FBI advises never to send cryptocurrency payments to individuals or companies without thoroughly researching them.
Additionally, people are urged to be cautious of companies claiming they can recover lost cryptocurrency, as many of these services charge up-front fees and may be fraudulent themselves.
The agency urges 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.
