FBI Issues Warning on Surge in Crypto Investment Scams, Reports 53 Percent Increase Over the Past Year

US' Federal Bureau of Investigation (FBI) recorded a significant rise in crypto investment scams in 2023. In its recently released ‘Internet Crime Report 2023', the FBI claimed that crypto investment scams rose by 53 percent last year. In investment scams, fraudsters offer crypto investment advice to potential victims and get them to invest in fake tokens – which eventually brings all the capital back to the scammers. These scams entice those targeted with promises of lucrative returns on their investments. Usually, social networking platforms like LinkedIn, Twitter, and Facebook are used by scammers to fish for potential victims.

Investment frauds with a reference to cryptocurrencies rose from $2.57 billion (roughly Rs. 21,260 crore) in 2022 to $3.94 billion (roughly Rs. 32592 crore) in 2023 – marking an increase of 53 percent, the FBI's report said.

Most victims of these frauds were aged between 30 to 49 years. The elderly, meanwhile, were more susceptible to falling for tech support scams. Comparing figures from 2022, the FBI said it received 8,80,400 financial scam complaints last year with the amount of loss coming close to $12.5 billion (roughly Rs. 103428 crore). This marks a 10 percent and 22 percent rise in number of complaints and amount stolen compared to 2022.

Following the US, Canada and India respectively registered 6,601 and 3,405 complaints of similar financial crimes in 2023, FBI's data claims. With the crypto market inching closer to its previous all-time high capitalisation of $3 trillion (roughly Rs. 2,48,20,350 crore), cyber criminals seem to be escalating attempts to scam crypto community members.

On one hand, the FBI has sounded an alert on the rising number of such incidents from last year, on the other hand, market research platform Scam Sniffer has highlighted the scam status for the crypto sector for 2024. As per its data, about 57,000 victims lost approximately $47 million (roughly Rs. 388 crore) to crypto phishing scams in February this year.

In most crypto scam cases, the stolen funds are usually wired directly into custodial accounts registered with crypto platforms. More often than not, third party payment processors are used to facilitate these transfers. Highlighting this, the FBI has urged all members of the crypto investment circle to enable two-factor authorisation (2-FA) to ensure their funds are not moved into other accounts without their permission.