FBI: Scammers Stole $5.6 Billion in Cryptocurrency Funds Last Year
Did one of your new internet friends recommend a can't-miss crypto investment? Don't waste your time (or money), the FBI warns, or you could become a statistic in the agency's next report.
By Michael Kan
For the first time, the FBI has published a cryptocurrency-focused fraud report to warn about the growing threat of scammers and hackers swindling consumers using digital currencies.
The report—which is based on FBI complaints—shows that at least $5.6 billion in cryptocurrency was lost to criminals in 2023, a 45% increase from the year before.
The 69K+ cryptocurrency-related complaints only represent about 10% of the total financial fraud complaints the FBI received last year. Nevertheless, the crypto losses had an outsized impact, accounting for "almost 50%" of the total financial fraud losses, the report adds.
(Credit: FBI)
In a call with journalists on Monday, an FBI official said one reason for the increase is that consumers are more willing to report crypto crimes amid heightened news coverage.
The other factor is that many consumers view cryptocurrency as a lucrative way to invest and become rich. As a result, all kinds of crimes, including computer hacking and ransomware attacks, have become associated with cryptocurrency.
The FBI’s report ranked “investment fraud” as the largest way criminals have been stealing cryptocurrency from victims, with losses hitting an estimated $3.96 billion last year.
(Credit: FBI)
“Many individuals have accumulated massive debt to cover losses from these fraudulent investments,” the report added. “While individuals in the age ranges of 30 - 39 and 40 - 49 filed the most cryptocurrency-investment fraud complaints (approximately 5,200 reports in each age group), complainants over the age of 60 reported the highest losses (over $1.24 billion).”
According to the FBI official, scammers will often perpetuate investment fraud by circulating fake apps or sites that look like official cryptocurrency trading platforms. But in reality, the fake apps or sites will lock up and abscond with the user’s funds once they begin investing.
Many scammers are also resorting to “Confidence-Enabled Cryptocurrency Investment Fraud,” or what’s also known as “pig butchering.” That’s when the criminal strikes up a long-term relationship with the unsuspecting victim and earns their trust before convincing them to invest into a fraudulent cryptocurrency scam.
(Credit: FBI)
The FBI official noted that pig-butchering scammers often send users a friendly SMS text, email, or social media message out of the blue, trying to befriend them. The scammers then try to build a rapport over many weeks or months without ever meeting the victim in person before bringing up a crypto investment opportunity.
In some cases, scammers ask the victim to put their money into a fake cryptocurrency trading platform. The platform might say the user is earning a return and even allow them to withdraw some earnings, but sooner or later, the victim’s funds will be locked down.
Fraudsters can also strike victims more than once. The report noted: “Individuals who report losing money to various schemes, particularly cryptocurrency investment fraud, are sometimes also targeted by fraudulent businesses that claim to help recover lost cryptocurrency funds.”
The FBI urged the public to stay on guard and report scams to the agency’s Internet Crime Complaint Center. The FBI official added that sometimes law enforcement is able to recover the stolen cryptocurrency. Reporting crimes, even when you don't lose anything, can also help law enforcement nab the perpetrators.
"If an investment opportunity comes from someone who you have never met in person – you have never met them for coffee, never walked together in the park, never gone together to see a movie – be extremely cautious of the advice," the FBI's report added.