‘Crypto Scams Skyrocketing in Complexity,’ Warns FBI, as $5.6B Lost to Fraud

• FBI warns crypto scams are rising daily and becoming more complex to track.
• In 2023, over 69,000 reported cases of crypto scams led to $5.6 billion in losses.
• In the first six months of 2024, the net losses from crypto scams have reached $1.9 billion.

In a troubling trend that has persisted despite law enforcement’s determined efforts to stem the tide, cryptocurrency-related scams and fraud have grown in recent years, driven by increasingly sophisticated tactics.

A newly released report by the Federal Bureau of Investigation (FBI) paints a stark picture of the epidemic, citing complex schemes that have eluded even the most advanced tracking technologies, leading to billions in losses.

69,000 Reported Crypto Scams

The Sept. 9 report revealed that in 2023, over 69,000 reported cases of crypto-related scams resulted in losses of $5.6 billion—a 45% spike from the previous year. This surge has put law enforcement agencies to the test, forcing them to adapt and innovate in their pursuit of would-be perpetrators.

As the scope of the problem has grown, so too has the demographic reach of crypto scams. Seniors, often cited as a vulnerable population, were disproportionately affected, with 16,806 complaints filed by individuals over 60, resulting in losses of $1.6 billion.

While scammers often target older age groups due to a perceived lack of tech knowledge, the report suggests that scammers are also increasingly targeting middle-aged adults. According to the data, the age groups between 30-39 and 40-49 were among the most vulnerable, with a combined total of over 10,000 cases of crypto fraud reported in 2023, and losses exceeding $1.5 billion. 

The FBI notes that the decentralized nature of cryptocurrency—which allows for quick, irreversible transactions and facilitates value transfer worldwide—is a key factor in the rise of crypto crimes. These characteristics make cryptocurrency both a lucrative target for legitimate investors and an attractive vehicle for those with illicit intentions.

These features have also created unique challenges for law enforcement agencies seeking to track and thwart crypto crimes, highlighting the need for continued innovation and collaboration in the fight against these increasingly sophisticated schemes.

Addressing the increasing severity of crypto scams, FBI Director Christopher Wray noted ,

“Scams targeting investors who use cryptocurrency are skyrocketing in severity and complexity. The best way to help stop these crimes is for people to report them to ic3.gov, even if they did not suffer a financial loss. The information allows us to stay on top of emerging schemes and criminals’ use of the latest technologies, so we can keep the American public informed and go after those who commit these crimes.”

Investment Scams Top the List

Crypto scams come in various guises, but investment scams were by far the most common, the FBI noted.

An investment scam is where scammers launch fake investment schemes promising high investment returns. 

Here’s how they typically work: scammers coax victims into making an initial investment, promising to double or triple the returns. The scammers then pressure the victims to invest more substantial sums, and once they have gained control of the funds, they typically cut off contact and disappear with the money.

Some common iterations of investment scams include liquidity mining schemes and fake play-to-earn game applications that promise enticing rewards.

According to FBI’s data, investment scams accounted for over 32,000 reported cases in 2023, dwarfing other scam types by a factor of at least four. The losses from such investment scams were $3.9 billion.

Phishing scams masquerading as tech support operations were the second most common scam type. These scams involve scammers impersonating representatives from top tech companies to gain access to victims’ sensitive information, ultimately leading to cryptocurrency theft.

Law Enforcement and Regulators Can’t Keep Up With Scams

The decentralized nature of cryptocurrencies, combined with the sophisticated technology used by scammers, has made it complex for law enforcement agencies and regulators to monitor these scams.

This is evident because, despite growing awareness among the general public and law enforcement agencies, the number of scams and losses associated with them keeps rising each year.

For the first six months of 2024, the FBI received over 18,000 complaints reporting crypto-investment scams, which resulted in more than $1.9 billion in losses.

In 2024, the Securities and Exchange Commission, in addition to the federal law enforcement agencies, carried out 11 enforcement actions, leading to fines of over $4.8 billion. This is the highest amount of fine levied by the SEC in the last 11 years despite four months remaining in the year.

Law enforcement agencies and regulators have requested the common public to be more aware of the scam tactics and watch out for too-good-to-be-true investment opportunities.