Crypto Fraud Cases Increase by 45%, Reaching $5.6 Billion

Crypto investors lost a record US$5.6 billion (AU$8.4 bn) to cyber crimes and Ponzi schemes in 2023 —marking a 45% increase from 2022, according to a report from the FBI’s Internet Crime Complaint Center (IC3).

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The report highlights that investment fraud was the most common and costly form of crypto crime, accounting for US$4 billion (AU$6 bn) of the losses. 

Over 69,000 crypto crime reports were filed with the FBI concerning investment fraud. These are the typical little-risk, high-return schemes that have grown in popularity. However, a notable type of fraud also rose in popularity in 2023. It involved “confidence-enabled” schemes, or “pig butchering”. 

Pig butchering goes down like this: the scammer establishes a false sense of security by building a long-term relationship with the victim via messaging apps, ultimately persuading them to invest large sums in fake cryptocurrency platforms where they cannot withdraw funds. 

Victims have often incurred significant debt due to these scams, with those over 60 years old losing more than US$1.24 billion (AU$1.80 bn)

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Human Traffickers Using Victims to Carry Out Scams

Although crypto-related crimes accounted for only 10% of complaints, they comprised half the overall financial losses. US investors were the most affected, accounting for 83% of the reports, with California residents leading in complaints and losses at US$1.2 billion (AU$1.80 bn).

As if that weren’t bad enough, the FBI’s report also linked some crypto scams to human trafficking, especially in Southeast Asia, where victims are forced to carry out these scams. The FBI warns US citizens traveling abroad of false job advertisements that may lead to labor trafficking in scam compounds.

The report stated:

These hold workers against their will and use intimidation to force the workers to participate in scam operations. Criminal actors post false job advertisements on social media and online employment sites to target people, primarily in Asia.

FBI