FBI Says 50% of All Financial Fraud Losses Involve Cryptocurrency

The number of cryptocurrency-related complaints accounted for 10% of all financial fraud complaints but 50% of the total losses in 2023.

That is due in part to the use of crypto in investment scams that see victims accumulating “massive debt” to cover their losses, the Federal Bureau of Investigation (FBI) said in its Cryptocurrency Fraud Report 2023 released Monday (Sept. 9).

Overall, losses to financial fraud involving the use of cryptocurrency leapt 45% in 2023, rising to $5.6 billion, according to the report. The FBI’s Internet Crime Complaint Center (IC3) received 69,468 complaints from the public involving the use of crypto.

“The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals, while creating challenges to recover stolen funds,” Michael D. Nordwall, assistant director of the FBI’s Criminal Investigative Division, wrote in the report. “Once an individual sends a payment, the recipient owns the cryptocurrency and often quickly transfers it into an account overseas for cash out purposes.”

While criminals exploit these features of cryptocurrency in every form of fraud tracked by IC3, that’s especially true in investment scams, per the report. Seventy-one percent of all losses related to cryptocurrency involved investment scams, while 10% of losses were associated with call center frauds, including tech/customer support scams and government impersonation scams.

Losses from crypto-related investment fraud schemes jumped 53% in 2023, reaching $3.96 billion, according to the report.

“Over the years, cryptocurrency’s widespread promotion as an investment vehicle, combined with a mindset associated with the ‘fear of missing out,’ had led to opportunities for criminals to target consumers and retail investors — particularly those who seek to profit from investing but are unfamiliar with the technology and the attendant risks,” the report said.

This report comes about a week after the Federal Trade Commission (FTC) released a data spotlight saying that the amount of money consumers lost to scams involving bitcoin ATM machines increased tenfold between 2020 and 2023, reaching $114 million.

Crypto has become a top payment method for many types of scams, the FTC said, adding: “Widespread access to [bitcoin ATMs (BTMs)] has helped make this possible.”

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