FBI Reports $5.6 Billion Losses from Cryptocurrency Scams in 2023

In a startling revelation, the FBI has reported that Americans lost a staggering $5.6 billion to cryptocurrency scams in 2023. This alarming trend has continued into 2024, with over 18,000 complaints related to crypto-investment scams filed in just the first six months, resulting in losses exceeding $1.9 billion.

According to James Barnacle, the deputy assistant director of the FBI's criminal investigative division, scammers employ sophisticated tactics to lure victims into believing their cryptocurrency investments will yield significant returns. "Over time, the victim is being cultivated, and the fraudsters are building confidence in the victim," Barnacle explained in an interview with ABC News. Scammers often create a false sense of friendship through social media or text messages before presenting enticing investment opportunities.

Victims are typically directed to a web application where they can invest their money. Barnacle noted that the allure of becoming a crypto millionaire drives many individuals to seek out these fraudulent schemes. Unfortunately, the consequences can be devastating. Many victims resort to taking out mortgages or liquidating retirement accounts to fund these scams, with some losing as much as $6 million.

The report highlights that individuals over the age of 60 are particularly vulnerable, having lost nearly $1.6 billion in 2023 alone. Barnacle attributes this vulnerability to the fact that older adults often have more free time and may be more accessible to scammers. "Elderly individuals are often at home or in assisted living facilities, making them easier targets for fraudsters who excel at building rapport," he stated.

Moreover, scammers provide detailed instructions on how to use cryptocurrency kiosks to deposit cash and transfer it to their wallets, further complicating recovery efforts for victims. Barnacle remarked, "You wouldn't think your 89-year-old grandmother would go to a kiosk, but we're seeing it all day long."

The likelihood of recovering lost funds is minimal, according to Barnacle. In response to this growing issue, the FBI is actively training state and local law enforcement to recognize the signs of cryptocurrency scams and is urging banks to be vigilant in identifying suspicious customer behavior.

Since the beginning of the year, the FBI has informed 3,000 individuals that they have fallen victim to fraud, yet many scams go unreported as victims often do not realize they have been scammed. Barnacle revealed that 75% of those notified were unaware they had been defrauded, underscoring the need for increased awareness and prevention measures.