Americans lost billions to cryptocurrency scams in 2023, according to a recent report from the United States Federal Bureau of Investigation.
Financial losses “involving the use of cryptocurrency, such as bitcoin, ether or tether” last year totaled over $5.6 billion, per the agency’s 2023 Cryptocurrency Fraud Report. That’s up 45% compared with 2022, according to the report.
Even more striking: While the number of reported crypto-related crimes accounts for around 10% of financial fraud complaints received by the FBI last year, the losses from those crimes accounts for nearly 50% of the total amount Americans lost to financial schemes.
Americans lost the most money to crypto investment scams
From fake gaming apps to pig-butchering schemes, there are many types of crypto scams. However, investment scams swindled Americans out of $4 billion, the highest loss by crypto crime type last year, per the FBI’s report.
“Over the years, cryptocurrency’s widespread promotion as an investment vehicle, combined with a mindset associated with the ‘fear of missing out,’ has led to opportunities for criminals to target consumers and retail investors,” the FBI says in its report.
This type of scam typically involves a cyber criminal promising their victim that they’ll earn large profits or returns on their investments while taking on little to no risk. In reality, no legitimate company or business venture can guarantee that you’ll earn a profit on your investment.
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Often, fraudsters will start by messaging their victim via dating apps, social media, email or text messages. They’ll sometimes communicate with victims for months in order to gain their trust before offering so-called investment advice about cryptocurrency.
If their victim takes the bait, they’ll lure the victim to sometimes very legitimate-looking websites controlled by the thieves, have the victim create an account and send their funds there.
The fake website will show victims that their investment is growing. However, when victims attempt to withdraw their money or earnings, they’re often unable to or the fraudsters will demand that they pay pricey fees in order to receive their funds.
And even after paying the fees, many victims aren’t able to recover the bulk of what they’ve already lost, per the FBI’s report.
How to identify potential crypto scams
American crypto traders of all ages were schemed out of billions of dollars, according to the FBI’s report. However, here are a few key steps you can take to avoid getting taken advantage of.
- Be cautious of messages from someone you don’t know or haven’t met in person who is claiming to represent a well-known company, bank or government agency. Don’t engage. Instead, independently research the company and try to verify if the message you’ve received is legitimate.
- Be on the lookout for websites that attempt to impersonate legitimate businesses or financial institutions. While some websites may look convincing at first glance, they’ll often contain spelling errors or swap out similar looking text characters in the domain name. For example, if the fraudsters are attempting to imitate Coinbase.com, their domain name may be C0inbase.com with the letter O swapped with a zero.
- Be wary of any promises to get rich quick. That’s especially true for offers to grow wealth quickly through crypto investing without taking on any risk, the FBI says: “If an investment opportunity sounds too good to be true, it likely is.”
If you suspect you’ve been the victim of financial fraud, crypto-related or otherwise, the FBI encourages you to file a complaint with its internet crime complaint center.
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