FBI: Americans Lost $5.6 Billion from Crypto Scams in 2023

The FBI has officially released a comprehensive report on cryptocurrency-related fraud in 2023. Accordingly, Americans lost a total of $5.6 billion due to financial fraud activities related to crypto, marking a 45% increase compared to 2022.

According to a report from the FBI's Internet Crime Complaint Center (IC3), in 2023, more than 69,000 complaints related to cryptocurrency scams were recorded.

Although cryptocurrency-related scams only accounted for about 10% of the total financial complaints received by the FBI in 2023, the losses caused contributed to nearly 50% of the total financial losses in the year. Specifically, the total amount of money lost due to crypto scams has reached 5.6 billion USD, a record loss and an increase of 45% compared to the figure in 2022.

Experts warn that this figure may be just the "tip of the iceberg", as there are many victims who have not reported the incident due to lack of knowledge, shame, or not knowing how to approach the authorities. Notably, cryptocurrency scams are often sophisticated, targeting not only new investors but also experienced investors with complex tricks and operating on a global scale.

The cause of the loss of 5.6 billion USD from scams

The FBI believes that the main reason for this increase is that scammers have cleverly exploited users' greed, taking advantage of the attraction of promises of "huge" profits in the cryptocurrency market. Along with that, the FOMO mentality has made many greedy investors "easy prey" for scams.

In addition to taking advantage of greed and FOMO mentality, the FBI also pointed out a number of other reasons contributing to the increase in cryptocurrency scams in 2023, including:

·       Lack of technological understanding: Many new investors lack knowledge about how cryptocurrency and blockchain transactions work, creating conditions for scammers to exploit sophisticated scams.

·       The anonymity and untraceability of transactions: Thanks to anonymous transactions on the blockchain, it is increasingly easy for criminals to carry out illegal activities without fear of being detected.

·       Lack of strict regulations and controls: The cryptocurrency market is still not strictly managed in many countries, creating loopholes for fraudulent activities to develop.

·       The rise of sophisticated scam platforms: Many fake platforms are created with interfaces and operations similar to reputable projects, making it difficult for users to distinguish between real and fake.

Trust-based scams lead the way in scams

Among crypto scams, investment scams are the most common and damaging type, accounting for 71% of the total losses, with losses of up to $3.96 billion. A common form of investment fraud mentioned by the FBI is "confidence-enabled fraud" or also known as "pig butchering". Fraudsters will approach victims through messaging apps, build long-term relationships, create trust before convincing them to invest in fake projects.

When victims are tricked into investing a large amount of money, they will not be able to withdraw money or profits from accounts on that fake platform. Some scammers even allow victims to withdraw small amounts of money initially to build trust, before “disappearing” with the victim’s entire investment. “Many victims of these scams have incurred significant debt to cover losses incurred from investing in bogus projects,” the FBI said.

People Over 60 Hit Hardest

The report also found that victims aged 30-49 filed the most complaints, but those over 60 were the hardest hit. Specifically, people over 60 lost more than $1.6 billion to cryptocurrency scams in 2023. This group is vulnerable to promises of big profits without being aware of the risks involved.

Human Trafficking and Cryptocurrency Scams

Another notable point in the report is the link between human trafficking and crypto scams. The FBI warns that many people have been tricked into working abroad with promises of high-paying jobs. However, once they arrive, they are forced to participate in crypto scams and controlled through debt or threats.

Scammers often post fake job postings on social media, promising attractive salaries and good working conditions, but in reality, victims will be forced to work in autonomous regions, especially in Southeast Asia.

The rise of cryptocurrency ATM scams

The FBI has recorded a significant increase in crypto ATM scams in 2023. According to the report, more than 5,500 complaints related to the use of these ATMs with a total loss of up to $189 million. This is a form of fraud that is becoming increasingly popular due to the anonymity and untraceability of transactions via crypto ATMs.

The loss of crypto kiosk scams

Scammers often instruct victims to withdraw money from their bank accounts, then transfer the money through crypto ATMs to complete the transaction. Because transactions are conducted via QR codes, the process of sending money becomes simple and convenient, but at the same time, it also helps the fraudster transfer money anonymously, making it difficult to trace the source or recover the assets. FBI Deputy Director of Criminal Investigation James Barnacle emphasized that:

"The possibility of recovering money from crypto ATM transactions is very low because the money is often transferred immediately to multiple accounts, even overseas. Of the 3,000 victims contacted by the FBI, 75% did not know they had been scammed. This shows the sophistication of crypto ATM scams, when fraudsters easily take advantage of the victim's ignorance."

Not only scamming users, crypto projects also suffered heavy losses in 2023. Another statistic shows that the crypto industry lost $1.95 billion in 2023 due to hacks, scams and security attacks, the 10 biggest hacks/scams of 2023 resulted in $1.1 billion in theft, accounting for more than half of the total loss, with names such as Multichain, Euler Finance; MixinNetwork; Poloniex, CoinEx, HECO, BonqDAO, Vyper/Curve, Atomic Wallet and KyberSwap.

In 2024, crypto scams have become increasingly sophisticated, especially through the hacking of social media platforms such as Discord, Twitter, and Instagram to serve memecoin pump-dumps since the launch of the memecoin release platform pump.fun. Notable hacks include Polygon's Discord hack, which cost $150,000; Kylian Mbappe's X (Twitter) account was hijacked to promote memecoin; and McDonald's Instagram memecoin was "shilled" for over $700,000.

Not stopping there, phishing attacks are also on the rise, including the hacking of Ethereum Foundation and Cointelegraph emails to spread phishing links, or the attack on Compound and Celer websites to redirect to a scam page that can steal users' money when interacting.

In the crypto industry, scams are becoming more and more sophisticated, and those who are not careful will fall into the trap. Therefore, investors themselves should equip themselves with the necessary knowledge to avoid losses before entering the market.