Americans lost billions of dollars to cryptocurrency scams in 2023, according to a recent report from the Federal Bureau of Investigation.
Financial losses “related to the use of virtual currencies, including Bitcoin, Ether and Tether,” totaled more than $5.6 billion last year, according to the agency's 2023 Cryptocurrency Fraud Report. This represents a 45% increase compared to 2022, according to the report.
What's even more surprising is that while the number of reported cryptocurrency-related crimes made up roughly 10% of all financial fraud complaints received by the FBI last year, the losses from those crimes accounted for nearly 50% of the total amount lost by Americans to financial fraud.
Americans lose the most money in cryptocurrency scams
Cryptocurrency scams come in all varieties, from fake gaming apps to schemes to slaughter pigs, but the FBI reported that investment fraud scams scammed Americans out of $4 billion last year, the highest total yet for cryptocurrency crimes.
“For many years, cryptocurrencies have been widely promoted as an investment vehicle, which, combined with a 'fear of being left behind' mentality, has created opportunities for criminals to target consumers and retail investors,” the FBI said in the report.
In these types of scams, cybercriminals typically promise victims huge profits or returns on their investment with little to no risk, when in reality, no legitimate company or business can guarantee a return on investment.
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Scammers often start by messaging their victims through dating apps, social media, emails and text messages. Scammers may spend months interacting with their victims to gain their trust before offering so-called investment advice on cryptocurrencies.
If a victim takes the bait, the criminals lure them to a seemingly legitimate website controlled by the criminals, where they trick them into creating an account and transferring funds to it.
The fake websites make it appear as though the victim's investment is increasing, but when the victim tries to withdraw their money or earnings, they are often unable to do so and the scammers demand that they pay high fees to receive the funds.
And even after paying the fee, According to the FBI report, many victims have already been unable to recover much of what they lost.
How to spot a potential crypto scam
The FBI reports that American cryptocurrency traders of all ages have been scammed out of billions of dollars, but here are some important steps you can take to avoid being scammed.
- Be wary of messages claiming to be from well-known companies, banks or government agencies from people you don't know or have never met in person.Do not engage, instead, independently research the company and verify if the message you receive is legitimate.
- Be wary of websites pretending to be legitimate businesses or financial institutionsWhile some websites may appear legitimate at first glance, they often contain spelling mistakes or similar-looking letters in the domain name that are swapped out. For example, if a scammer is trying to imitate Coinbase.com, the domain name might be C0inbase.com, with the letter O replaced with a zero.
- Beware of get rich quick schemesThe FBI said this is especially true when it comes to offers of rapid wealth growth through cryptocurrency investments without any risk, saying: “If an investment opportunity sounds too good to be true, it likely is not.”
If you suspect you have been a victim of cryptocurrency-related or other financial fraud, the FBI encourages you to file a complaint with the Internet Crime Complaint Center.
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