14 October 2024

Cryptocurrency Scams Cost Americans $5.6 Billion in 2023, Targeting Older Adults Most Severely

The FBI's report reveals that cryptocurrency scams cost Americans $5.6 billion in 2023, with older adults being the most affected demographic.

Cryptocurrency Scams Cost Americans $5.6 Billion in 2023, Targeting Older Adults Most Severely

In a shocking revelation, the FBI's inaugural Cryptocurrency Fraud Report has disclosed that Americans lost a staggering $5.6 billion to cryptocurrency scams in 2023, with older adults bearing the brunt of these fraudulent activities.

The report, released on Monday, highlights that over 69,000 complaints were filed by Americans who fell victim to scams, often facilitated through widely accessible crypto ATMs. Notably, individuals aged 60 and above accounted for more than 16,000 of these complaints, reporting losses exceeding $1.6 billion—significantly higher than any other age demographic. In contrast, those under 20 reported the fewest incidents, with only 858 complaints totaling nearly $15 million.

The scams reported varied widely, encompassing fake tech support, extortion, and impersonation of government officials. A staggering $4 billion of the reported losses stemmed from investment scams, particularly the notorious 'pig butchering' scams, marking a 53% increase from the previous year's losses of $2.57 billion.

In these pig butchering schemes, fraudsters create a deceptive persona and establish a prolonged romantic or friendly relationship with their victims, ultimately persuading them to invest substantial amounts into fraudulent cryptocurrency platforms. The FBI noted, "These schemes promise large returns with minimal risk, exploiting the widespread promotion of cryptocurrency as an investment and the prevalent 'fear of missing out' mentality among consumers."

According to Chainalysis, a firm specializing in cryptocurrency tracking, pig butchering scams emerged as the most profitable form of cyber fraud last year, with victims losing an average of nearly $5,000 each.

Amy Nofziger, AARP's director of fraud victim support, emphasized that older Americans are particularly vulnerable due to their accumulated wealth and relative unfamiliarity with emerging technologies like cryptocurrencies. She stated, "While the reported losses of $5.6 billion are significant, the actual figure is likely much higher, considering many cases go unreported."

The report also revealed that a majority of victims who utilized cryptocurrency kiosks—commonly known as Bitcoin ATMs—during their scams were over the age of 60, underscoring the challenges older Americans face in navigating cryptocurrency exchanges.

Cryptocurrency kiosks, which allow users to deposit cash for Bitcoin and other cryptocurrencies, pose a unique risk for those unfamiliar with the technology. Scammers often exploit this by sending victims QR codes to scan, instructing them to deposit cash into the machines.

Law enforcement agencies in the West rarely apprehend the perpetrators of these scams. A United Nations report from last year indicated that many pig butchering operations are orchestrated by human trafficking victims in Southeast Asia. However, in December, federal prosecutors arrested four individuals—three in Southern California and one in Chicago—accused of orchestrating a pig butchering scheme that defrauded victims of over $80 million.

Source: NBC News