Investment fraud relating to crypto rose 53% in 2023, FBI says
While the FBI notes crimes involving cryptocurrency scams have trended higher in recent years, Chainalysis analysts say the on-chain data begs to differ
Dzelat/Shutterstock modified by Blockworks
Crimes involving cryptocurrency scams are on the rise, seeing a 53% year-over-year increase in 2023, according to the Federal Bureau of Investigation’s latest internet crime report.
“Investment fraud with a reference to cryptocurrency rose from $2.57 billion in 2022 to $3.94 billion in 2023,” the report, published Wednesday, read. “These scams are designed to entice those targeted with the promise of lucrative returns on their investments.”
Online fraud losses totalled more than $12.5 billion in 2023, up 22% from 2022, data from the Internet Crime Complaint Center (IC3) shows. Scams involving business email compromise — schemes targeting both companies and individuals — accounted for $2.9 billion of total losses in 2023, the FBI found.
Read more: All fraud will eventually be ‘crypto fraud.’ And that’s okay.
Email swindlers are turning to cryptocurrencies to facilitate their cons, the report added, with more illicit actors using exchanges and other third parties to collect funds from victims.
“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,” the report noted, adding that two-factor authentication is a helpful additional layer of security.
The increase in crypto-related schemes comes a year after the FBI first warned of a spike in digital asset investment fraud. In March 2023, the agency warned the public that illicit actors are increasingly using dating applications, social media sites, networking platforms and messaging services to find victims.
Blockchain analytics firm Chainalysis however argues that despite the FBI’s findings, globally, funds stolen through crypto investment scams have been decreasing in recent years.
Read more: Average potential crypto rug pull makes $2,600 in profit: Chainalysis
“Our on-chain metrics suggest scamming revenues globally have been trending down since 2021,” Chainalysis analysts noted in their latest crime report. “We believe this aligns with the long-standing trend that scamming is most successful when markets are up, exuberance is high, and people feel like they are missing out on an opportunity to get rich quickly.”
Chainalysis, like the FBI, acknowledged that not all crimes are reported, and romance schemes in particular are likely going under the radar. However, the firm maintained that generally speaking, 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,” Chainalysis analysts wrote. “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.”
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