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FBI's Report On Crypto Fraud Increasingly Sophisticated Scams Rising Use Of Crypto In Fraud Are Crypto-Related Scams Decreasing?The Federal Bureau of Investigation's (FBI) Internet Crime Complaint Center's (IC3) cybercrime report has revealed a significant increase in crypto-related fraud over the past year.
The 2023 IC3 report states that crypto-related frauds have registered an increase of 53% in 2023.
FBI's Report On Crypto Fraud
The FBI's report gives a comprehensive overview of the current state of cybercrime and the challenges posed by using crypto to facilitate fraudulent activities. Data in the report indicated a significant increase in crypto-related investment scams. The report states that losses due to fraud have risen from $2.57 billion in 2022 to $3.94 billion in 2023, an increase of 53%.
"Investment fraud involving cryptocurrency rose from $2.57 billion in 2022 to $3.94 billion in 2023. These scams are designed to entice those targeted with the promise of lucrative investment returns."
Increasingly Sophisticated Scams
Crypto scams trick individuals by promising significantly higher returns on investments in digital currencies. The report stated that such scams have become increasingly sophisticated, with criminals leveraging the burgeoning growth of the crypto space to lure unsuspecting victims and causing significant financial loss. Data in the report also reveals that victims of these scams belong to all age groups, with most victims falling in the 30 to 60 age gap.
The report urged users to use security measures such as two-factor and multi-factor authentication to protect against such scams. It also highlighted the importance of verifying payment and purchase requests to reduce the risk of falling for such scams.
One of the most common scams targeting crypto users is the Romance Scam. In this scam, criminals adopt a fake identity online, gain a victim's trust and affection, and trick the victim into sending crypto, only to disappear after. According to Chainalysis, Romance scams resulted in crypto users losing over $370 million in 2023.
Rising Use Of Crypto In Fraud
The report also revealed a growing trend of hackers using crypto to rapidly transfer and disburse stolen funds through Business Email Compromise (BEC) schemes. BEC scams involve fraudsters manipulating email accounts to authorize fraudulent transactions.
"Data suggests fraudsters are increasingly using custodial accounts held at financial institutions for cryptocurrency exchanges or third-party payment processors, or having targeted individuals send funds directly to these platforms where funds are quickly dispersed."
Ransomware attacks also increased by 18% in 2023 and reported financial losses increased by 74%, totaling a staggering $59 billion in 2023. The report's contents are a stark reminder of the threat posed by cybercriminals, particularly to critical infrastructure sectors.
Are Crypto-Related Scams Decreasing?
The FBI report comes after the agency warned of a spike in digital asset investment fraud. In 2023, it warned that criminals were increasingly using social media and dating platforms to Target victims. However, Chainalysis has argued that funds stolen using crypto scams have declined in recent years.
"Our on-chain metrics suggest scamming revenues globally have been trending down since 2021. This aligns with the long-standing trend that scamming is most successful when markets are up, vitality is high, and people feel missing out on an opportunity to get rich quickly.
However, Chainalysis acknowledged that not all crimes are reported, with Romance Scams, in particular, going under the radar. However, the form stuck to its claim, stating that crypto-related fraud is on the decline.
"And while increased reporting — at least in the US — is a good sign, we still believe insights into romance scams, in particular, suffer from underreporting. We hypothesize that the true damage of scamming is greater than what reporting to the FBI and our on-chain metrics show, but overall, scamming is down, given broader market dynamics."
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
