Washington Ranks Among Top States for Cryptocurrency Fraud in 2023
In 2023, the FBI reported over 69,000 complaints related to cryptocurrency fraud, leading to staggering losses exceeding $5.6 billion nationwide. Washington state emerged as one of the hardest-hit areas, with losses surpassing $141.7 million from more than 2,000 reported cases.
The FBI's Internet Crime Complaint Center noted a significant 45% increase in reported losses compared to the previous year. The types of fraud reported included tech support scams, investment fraud, and government impersonation schemes, with investment fraud alone accounting for a staggering $3.9 billion of the total losses.
FBI Director Christopher Wray emphasized the growing complexity and severity of scams targeting cryptocurrency investors. He urged victims, even those who did not incur financial losses, to report incidents at ic3.gov. This data is crucial for tracking emerging scams and understanding how criminals exploit new technologies to deceive the public.
Scammers frequently initiate contact through dating apps or social media, cultivating trust over weeks or months before proposing cryptocurrency investments. Once a rapport is established, they direct victims to counterfeit websites or applications, sometimes allowing small withdrawals to create an illusion of legitimacy.
In the newly released Cryptocurrency Fraud report, Washington ranked fifth in the number of complaints and seventh in total financial losses. California led the nation with losses exceeding $1.1 billion, followed by Texas, Florida, New York, New Jersey, Illinois, Arizona, Pennsylvania, and Virginia in the top ten.
The FBI's report highlighted the unique challenges law enforcement faces in tracking cryptocurrency transactions, especially when funds are transferred to exchanges in jurisdictions with lax anti-money laundering regulations. Despite the traceability of cryptocurrency transactions, these challenges complicate efforts to recover lost funds.
One of the most significant cases of cryptocurrency fraud in Washington involved FTX founder Sam Bankman-Fried, who was convicted of fraud after allegedly misappropriating at least $10 billion from customers and investors. FTX, once the world's second-largest cryptocurrency exchange, declared bankruptcy in 2022. High-profile figures, including NFL quarterback Tom Brady and supermodel Gisele Bündchen, faced lawsuits for their involvement with FTX, accused of lending credibility to the failed exchange.
Bankman-Fried received a 25-year prison sentence and was ordered to forfeit $11 billion for orchestrating multiple fraudulent schemes. This case underscores the ongoing risks associated with cryptocurrency investments and the importance of vigilance in the digital financial landscape.