11 October 2024

FBI Reports Cryptocurrency Fraud Accounts for 50% of Financial Fraud Losses in 2023

The FBI reports that cryptocurrency-related complaints represent 10% of all financial fraud complaints but account for 50% of total losses in 2023, highlighting the risks of digital currencies.

FBI Reports Cryptocurrency Fraud Accounts for 50% of Financial Fraud Losses in 2023

In a striking revelation, the Federal Bureau of Investigation (FBI) has reported that cryptocurrency-related complaints constitute only 10% of all financial fraud complaints, yet they account for a staggering 50% of total financial losses in 2023. This alarming trend highlights the growing risks associated with digital currencies and the scams that exploit them.

According to the FBI's Cryptocurrency Fraud Report 2023, released on September 9, losses attributed to financial fraud involving cryptocurrency surged by 45% this year, totaling an astonishing $5.6 billion. The FBI’s Internet Crime Complaint Center (IC3) documented 69,468 complaints from the public regarding cryptocurrency fraud.

Michael D. Nordwall, assistant director of the FBI’s Criminal Investigative Division, emphasized the challenges posed by the decentralized nature of cryptocurrency. "The speed of irreversible transactions and the ability to transfer value globally make cryptocurrency an attractive vehicle for criminals, complicating the recovery of stolen funds," he stated. Once a payment is made, the recipient typically converts the cryptocurrency into cash through overseas accounts, making it difficult to trace.

The report indicates that investment scams are particularly prevalent, with 71% of all cryptocurrency-related losses stemming from these fraudulent schemes. Additionally, 10% of losses were linked to call center frauds, including scams impersonating tech support or government officials. Notably, losses from crypto-related investment fraud surged by 53% in 2023, reaching $3.96 billion.

The FBI report highlights a concerning trend: the promotion of cryptocurrency as an investment vehicle, combined with a pervasive 'fear of missing out,' has created fertile ground for criminals targeting unsuspecting consumers and retail investors. Many individuals eager to profit from investments lack familiarity with the technology and its associated risks, making them vulnerable to scams.

This report follows a recent data spotlight from the Federal Trade Commission (FTC), which revealed that consumer losses from scams involving bitcoin ATM machines skyrocketed tenfold between 2020 and 2023, totaling $114 million. The FTC noted that the widespread availability of bitcoin ATMs has facilitated the rise of these scams, further underscoring the need for consumer awareness and caution when engaging with cryptocurrency.

As cryptocurrency continues to gain traction as a payment method, it is crucial for consumers to remain vigilant and informed about the potential risks and scams associated with digital currencies.

Source: PYMNTS.com