Crypto Investment Fraud Spiked 53% in 2023: FBI

The Federal Bureau of Investigation (FBI) has revealed that losses incurred from cryptocurrency investment fraud incidents increased from $2.57 billion in 2022 to $3.94 billion in 2023, representing a 53% increase year-over-year.

According to the FBI’s Internet Crime Report 2023, criminals found more ways to scam victims, enticing their targets with promises of lucrative returns on their investments.

Crypto Investment Fraud Increased in 2023

The FBI’s Internet Crime Complaint Center (IC3) received over 880,400 complaints in 2023, with potential losses surpassing $12.5 billion. The agency noted a 10% and 22% increase in complaints and losses, respectively, compared to 2022.

“As impressive as these figures appear, we know they are conservative regarding cybercrime in 2023. Consider that when the FBI recently infiltrated the Hive ransomware group’s infrastructure, we found that only about 20% of Hive’s victims reported to law enforcement. More reporting from victims would mean superior insight for the FBI,” the agency stated.

Losses from investment fraud ranked the highest, rising 38% from $3.31 billion in 2022 to $4.57 billion in 2023. Crypto investment scams amounted to $3.94 billion out of the $4.57 billion.

Crypto Scammers Target Business Emails

Besides the losses from crypto investment scams, the IC3 also received 21,489 Business Email Compromise (BEC) complaints with adjusted losses of over $2.9 billion.

“BEC is a sophisticated scam targeting both businesses and individuals performing transfers of funds. The scam is frequently carried out when a subject compromises legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers of funds,” the FBI explained.

Although the BEC scheme originally involved requests for W-2 information and compromised vendor emails, the IC3 found that the scammers have begun using custodial accounts created at financial institutions for crypto exchanges or third-party payment processors. The FBI insisted that the new development underscores the importance of using multi-factor authentication as an additional security layer.

Meanwhile, the FBI prevented some scams through quick action taken by the IC3’s Recovery Asset Team (RAT). RAT implemented the Financial Fraud Kill Chain (FFKC) initiative on 3,008 incidents with potential losses of $758 million and froze $538.39 million, representing a 71% success rate.