In 2023, cryptocurrency fraud continued to escalate globally amid the increased adoption of digital currencies.
The Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center (IC3) reported a record 69,468 crypto-related complaints. This marks a 33.6% increase from the previous year’s approximately 52,000 complaints.
Furthermore, the report revealed that losses from these scams surged by 45% year-over-year, reaching an all-time high of $5.6 billion. Despite representing only 10% of total financial fraud complaints in 2023, cryptocurrency fraud accounted for nearly 50% of total fraud losses.
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Investment Fraud Dominates Crypto Scams
Investment fraud was the leading type of cryptocurrency scam in 2023, constituting nearly half of all crypto-related complaints and 71% of associated losses.
Per the report, losses from crypto investment fraud rose sharply from $2.57 billion in 2022 to $3.96 billion in 2023, a staggering 53% increase.
So what makes you a prime targets for scammers? A notable tactic that emerged involved scammers using dating apps, social media, and professional networking sites. These help build trust with targets before introducing them to fraudulent crypto investment opportunities.
These socially engineered scams were highly effective. It convinced unsuspecting individuals to invest through fake websites or apps controlled by the criminals.
📈45% surge in crypto scams in 2023
$5.6B lost to fraud according to the latest FBI report. From investment schemes to phishing attacks, the risks are rising.
🛡️ Stay informed with the full breakdown of the report
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Another growing trend in 2023 was the use of crypto kiosks for fraudulent activities. Crypto kiosks, which are similar to ATMs, allow users to exchange cash for cryptocurrency, offering a degree of anonymity that appeals to criminals.
Scammers often direct victims to use these kiosks, providing detailed instructions on how to withdraw cash, locate a kiosk, and complete the transaction. The use of QR codes to send cryptocurrency directly to the scammer’s destination is a common method.
In 2023, over 5,500 complaints related to crypto kiosks were reported, with losses exceeding US$189 million. The most common types of scams involving crypto kiosks included tech support fraud (46%), extortion (17%), and government impersonation (10%).
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Emerging Crypto Recovery Schemes
A new form of fraud that emerged in 2023 involved fake crypto recovery services. In these schemes, fraudsters pose as representatives of businesses offering to recover lost funds, often contacting victims of previous scams through social media or messaging platforms.
These criminals charge an upfront fee and either disappear after receiving the initial payment or provide an incomplete report, requesting additional fees for further action.
Despite the rise in scams, global cryptocurrency activity continued to grow, fueled by the launch of bitcoin and ether exchange-traded funds (ETFs) in the US, increased adoption in developing economies, and a rebound in crypto prices.
Data from Chainalysis shows that between Q4 2023 and Q1 2024, global crypto activity reached higher levels than those seen during the 2021 bull market.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
