Investors lost a record $5.6 billion to crypto-related financial crime in 2023, up 45% from 2022, according to a new report from the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center.
According to the report published Monday, investment fraud was the most pervasive – and expensive – type of crypto-related fraud in 2023. Of the more than 69,000 reports of crypto-related crime the agency received last year, nearly half were reports of investment fraud, and investment fraudsters made off with a whopping $4 billion. And while crypto crimes only made up about 10% of the complaints the FBI received, the $5.6 billion figure was roughly half the overall loss by complainants.
Investment fraud schemes typically promise their victims the opportunity to make large returns with minimal risk, and have been on the rise in recent years. Last year, the most prominent type of crypto-related investment fraud was what the FBI described as “confidence-enabled” schemes. Sometimes called “pig butchering,” this type of investment fraud takes place over long periods of time as scammers form relationships with their victims, usually over messaging apps, before encouraging them to invest huge amounts of money in fraudulent cryptocurrency platforms that they are unable to withdraw from.
According to the FBI’s report, many victims of these pig butchering or investment scams have “accumulated massive debt to cover losses from these fraudulent investments.” While victims between the ages of 30-49 filed the most complaints related to investment scams, victims over the age of 60 reported the most losses – over $1.24 billion last year alone.
Though the IC3 receives complaints from both U.S. residents and international individuals, a significant majority of cryptocurrency-related fraud reports last year were from Americans, with Californians reporting the most cases (9,522) and suffering the greatest financial losses ($1.2 billion).
A 2022 ProPublica investigation – echoed later by the United Nations and other organizations – discovered that numerous cryptocurrency scam operators are actually victims of human trafficking, controlled by gangs in Southeast Asia that engage in a scheme known as pig butchering, where victims are coerced into scamming activities.
The FBI has issued a caution for U.S. citizens traveling internationally regarding the dangers of deceptive employment ads that lead to labor trafficking in scam operations situated abroad.
These illicit operations confine workers, forcing them to take part in scams under duress. Wrongdoers often use social media and online job platforms to lure individuals, mainly from various parts of Asia, through fraudulent job postings.
“Workers are often told they must pay for travel and other expenses, meaning the worker starts off in debt. They must then work off the debt while also trying to pay off their room and board. The criminal actors use the worker’s mounting debt and fear of local law enforcement as additional means to control them. Trafficked workers are sometimes sold and transferred between compounds, further adding to their debt,” the report continued.
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