The Federal Bureau of Investigation, or FBI, reports that cryptocurrency fraud losses jumped a whopping 45% to $5.6 billion in 2023, while complaints of scams involving digital assets have grown, with nearly 69,000 filed by victims across the country.
The investment scams turned out to be the most prevalent, accounting for 71% of the total losses reported to the FBI. These scams exploit the fear of missing out on cryptocurrency market gains by promising big profits. The report also shows that California, Florida, and Texas had the most complaints.
Source: FBI
Source: FBIVictimizing Elderly People: FBI
The report presents a very serious cause of concern from the demographic point of view: Individuals above 60 years were the largest victims of the scam, by losses to the tune of almost $1.6 billion. Still, the people between 30 and 39 years of age also suffered big losses, proving these scams were far-reaching.
Source: FBI
Source: FBIImpersonation Scams And Crypto Kiosks
Other notable fraud categories, alongside investment scams, include call center frauds, where criminals impersonate government officials with the aim of extorting cryptocurrency from an unsuspecting individual. These crimes account for nearly 10% of total losses.
Meanwhile, scammers have increasingly used cryptocurrency kiosks-or ATM-like machines-where individuals can change out cash for crypto. More than 5,500 of those complaints filed to the FBI involved the use of cryptocurrency kiosks, adding up to more than $189 million in losses.
As of today, the market cap of cryptocurrencies stood at $1.97 trillion. Chart: TradingView.com
Regulatory Response And Challenges
The number of crypto fraud cases has precipitously risen, which raises concerns about what consumers feel about digital assets and regulatory scrutiny. More and more, regulators have become focused on tamping down the fraud within the crypto sector.
However, the decentralized nature of virtual currencies and the ease with which transactions that cannot be reversed are completed anywhere in the world without conventional financial intermediaries make policing rather difficult. Tracing cryptocurrency transactions transferred to overseas exchanges is daunting.
The FBI’s report called for caution on the part of investors, to take a closer look at opportunities and avoid schemes promising unrealistically high returns.
The bureau added that any suspicious activity should be reported, even without financial loss, so law enforcement can stay on top of emerging schemes and the latest technologies used by the bad guys.
Whereas the use of cryptocurrency is on the rise, so is the risk of scams concerning it. Individuals should be more skeptical of investment and offers related to cryptocurrency and verify any such opportunity for legitimacy before committing funds.
The fight against crypto fraud needs to be combined among law enforcement, regulating bodies, and the public in protecting the integrity of the digital asset ecosystem.
Featured image from DataVisor, chart from TradingView
