According to the FBI, Americans lost more than $5.6 billion to cryptocurrency-related scams in 2023.
The agency is In a report released on Monday, The bureau said it received more than 69,000 complaints last year from victims of financial fraud linked to cryptocurrencies such as Bitcoin, Ethereum and Tether, amounting to approximately $5.6 billion in losses. This represents a 45% increase in losses since 2022, according to the report.
Most of these losses were due to investment fraud, which accounted for $3.9 billion of the total losses, according to the FBI, with identity theft ($494.4 million lost) and tech support scams (about $421 million lost) also accounting for significant losses.
Michael Nordwall, assistant director of the FBI's Criminal Investigation Division, noted that while only 10 percent of fraud complaints last year were crypto-related, financial losses from those complaints accounted for nearly half of the total cash lost in 2023.
“Cryptocurrencies' decentralization, the speed of irreversible transactions, and the ability to transfer value around the world make them an attractive vehicle for criminals, while also making it difficult to recover stolen funds,” Nordwall wrote.
The FBI found that criminals almost always build trust and rapport with their victims before convincing them to invest in cryptocurrencies using fraudulent websites or apps. To do this, criminals contact their victims through dating apps, social media platforms, professional networking sites and encrypted messaging apps, the report noted.
According to the FBI, once victims are persuaded to visit a fraudulent website or app, criminals guide them through the investment process and offer false promises of returns.
Victims sometimes make a small profit, but when they try to withdraw their full investment, they are told they have to pay fees and taxes — and even if they do, the criminals won't withdraw the funds, authorities added.
In some cases, victims who report financial losses are targeted by fake companies claiming to help them recover their lost cryptocurrency funds. These fraudulent companies charge an upfront fee and then either stop contact after the initial defense or ask for more funds, the report explains.
The states with the most complaints were California (9,522), Florida (5,076), Texas (4,770), New York (3,202), and Washington (2,049). The states with the least complaints were South Dakota (117), North Dakota (103), Wyoming (96), and Vermont (69).
To avoid these scams, the FBI recommends researching and verifying any unknown callers, websites or social media accounts before interacting with them, adding that people should never provide personal information without first verifying the requester's identity.
Crypto-related fraud was thrust into the spotlight in 2022 following the collapse of crypto exchange FTX and the subsequent trial of its founder, Sam Bankman Freed, who was convicted on seven counts of fraud and conspiracy and later sentenced to 25 years in prison.
