US Citizens Lost $5.6 Billion to Crypto Scams Last Year: FBI Report

Crypto industry is growing by the day with innovative applications, so do the crypto scams. According to a recent report published by the FBI, US people lost a significant $5.6 billion to cryptocurrency scams. The fact that older people who are around or more than 60 years are a majority of the victims is noteworthy.

Cryptocurrency Fraud Report: FBI

Earlier this week, the FBI published its first annual “Cryptocurrency Fraud Report”, detailing the scenario of crypto scams in the country. The total estimated crypto losses breached the $5.6 billion mark last year. As per the report, the FBI’s Internet Crime Complaint Center (IC3) received more than 69,000 complaints in 2023 reporting crypto frauds. Most of these frauds involved top cryptocurrencies such as Bitcoin, Ether, Tether, etc.

The report further demonstrated that there is a 45% increase in losses related to crypto scams from 2022. Both the number of complaints and crypto losses rose by a substantial amount in 2023 compared to its previous year. “Investment Fraud” is the most reported crypto scam with 32,094 complaints and $3.9 billion loss. Tech support, personal data breach, extortion, pig-butchering, government impersonation are top in the list of crime types.

The report further demonstrated that there is a 45% increase in losses related to crypto scams from 2022. Both the number of complaints and crypto losses rose by a substantial amount in 2023 compared to its previous year. “Investment Fraud” is the most reported crypto scam with 32,094 complaints and $3.9 billion loss. Tech support, personal data breach, extortion, pig-butchering, government impersonation are top in the list of crime types.

Older people are target

Another important thing highlighted in the report is the demographics of the people who fell victim to these scams. Most of the people who lost crypto fell into the category of more than 60 years of age group. They lost a huge amount to crypto scams worth $1.6 billion.

On the other hand, less number of victims fell in the less than 20 age group, with only $15 million loss. And, a large number of victims belong to California, followed by Texas, Florida, New York, New Jersey, among other

Older people having more wealth and lack of technological understanding regarding how these digital currencies work seem to be targeted by the scammers. Additionally, most of the victims used cryptocurrency kiosks, which are ATM-like devices that enable users to exchange fiat currency with cryptocurrency. The scammers seem to be sending QR codes to scan and then instructing victims to use a kiosk and deposit money.

Decentralization: A Boon or Bane?

The decentralized nature of cryptocurrencies brought innovation into the finance industry. However, it is the same nature that is leading to exploiters robbing billions of funds. While the inception of cryptocurrencies and blockchain is to eliminate intermediaries so that users can make faster and cheaper transactions, the elimination of middle financial institutions has become an advantage to fraudsters.

Additionally, crypto transactions are fast and irreversible. Scammers are also leveraging this characteristic to transfer large amounts of funds from one part of the globe to another. Since the transaction is irreversible, victims find it difficult to take back their funds. The same characteristics that make crypto and blockchain a unique innovation are becoming the same reason for such huge scams and fund losses.

Botsfolio’s Take:

Officials at Botsfolio say, “Blockchain is a revolutionary technology, with the potential to transform finance. Neither can we blame the decentralized and irreversible nature of blockchain and crypto nor can we stop the technological development and innovation that is going on at a rapid pace. With a better understanding of how crypto technology works and its usage, along with robust security precautions and clear regulations in place we can avoid such huge loss to scams.”