FBI issues warning on rise in crypto investment scams, reports 53 percent increase in past year

The US Federal Bureau of Investigation (FBI) has recorded a significant increase in crypto investment fraud in 2023. In its recently released “2023 Internet Crime Report,” the FBI claims that crypto investment fraud increased by 53 percent last year year. In investment scams, fraudsters offer crypto investment advice to potential victims and get them to invest in fake tokens – which ultimately returns all the capital back to the fraudsters. These scams lure targets with promises of lucrative returns on their investments. Social networking platforms such as LinkedIn, Twitter and Facebook are commonly used by scammers to hunt for potential victims.

Investment fraud related to cryptocurrencies grew from $2.57 billion (roughly Rs. 21,260 crore) in 2022 to $3.94 billion (roughly Rs. 32,592 crore) in 2023 — a 53 percent increase, according to FBI report said.

Most victims of these scams are between the ages of 30 and 49. Seniors, meanwhile, were more susceptible to tech support scams. Comparing data from 2022, the FBI said it received 8,80,400 complaints of financial fraud last year, with the loss amount approaching $12.5 billion (roughly Rs. 103,428 crore). This marks a 10% and 22% increase in the number of complaints and amounts stolen compared to 2022.

After the US, Canada and India recorded 6,601 and 3,405 complaints of such financial crimes respectively in 2023, according to FBI data. With the crypto market nearing its previous all-time high cap of $3 trillion (roughly Rs. 2,48,20,350 crore), cyber criminals seem to be escalating their attempts to defraud members of the crypto community.

On the one hand, the FBI has warned about the increasing number of such incidents since last year, on the other hand, the market research platform Scam Sniffer highlighted the state of fraud in the crypto sector for 2024. According to its data, about 57,000 victims lost approximately 47 million dollars (approx. 388 crores) from crypto phishing scams in February this year.

In most cases of crypto fraud, the stolen funds are usually transferred directly to escrow accounts registered with crypto platforms. More often than not, third-party payment processors are used to facilitate these transfers. Underscoring this, the FBI urged all members of the crypto investment circle to enable two-factor authorization (2-FA) to ensure that their funds are not moved to other accounts without their permission.