Americans lost $5.6 billion in cryptocurrency scams in 2023, according to a new report released by the FBI on Monday.
Scammers use elaborate tactics to assure potential victims that their investment in cryptocurrency will pay off, according to James Barnacle, the deputy assistant director of the criminal investigative division at the FBI.
“Over time, the victim is being cultivated, and the fraudsters are building confidence in the victim,” Barnacle told ABC News. “They’re friends. They met on the internet, or they met on social media. They’ve met on text message. They develop a friendship, then the fraudster will offer an investment opportunity, and the pitch is something along the lines of like, ‘Hey, I’m in a group that does investments or I know someone that does investments in cryptocurrency.'”
From there, Barnacle said, the victim is given a web app to place their money in.
“Everyone reads about all these crypto millionaires, so people are looking for the next big investment opportunities and fraudsters take advantage of that,” he said.
The impacts of these schemes, however, are devastating, according to Barnacle .
“Some people take mortgages, or third mortgages or equity lines of credit. People withdraw or liquidate from their 401(k) or their IRA, and they’ll put money into these investment schemes, keep putting in more and more and more,” he said. “We’re seeing people lose $4 million, $5 million, $6 million. We’re seeing people that are complaining and reaching out to us for $2,000 … it’s a huge impact to the victim.”
The report found that people over 60 years old were the most scammed: they lost nearly $1.6 billion in 2023.
“Elderly have generally a lot more free time,” Barnacle explained. “They’re at home, they’re in an assisted living facility, and so they’re pretty easy to target, in that sense, just their availability is higher than someone who’s not at home all day. And the fraudsters are really good at building that rapport.”
Fraudsters also give “detailed” directions on how to go to a cryptocurrency kiosk and deposit cash and transfer it to a scammer’s crypto wallet, he noted.
“You wouldn’t think your 89-year-old grandmother would go to a kiosk, but we’re seeing it all day long,” Barnacle said.
The chances that someone recovers the money are “slim,” Barnacle said.
FBI officials, in an effort to prevent fraudsters from taking money from victims, are training state and local law enforcement to better see the warning signs of crypto scams, and they are asking banks to also look out for the warnings from customers.
“They’re coming into your bank and saying they need cash for that home renovation project [but] does it make sense that they keep coming in and taking out significant amounts of money, even when some of them, the elderly folks, may live in a nursing home,” Barnicle said.
Since January, the FBI has notified 3,000 people that they were victims of fraud; however, the number of scams is being undercounted because many people don’t realize they are being scammed.
“The 3,000 people we’ve notified this year, 75% had no idea they were victims of fraud,” Barnacle said.
In a recent report released by the Federal Bureau of Investigation (FBI), it was revealed that Americans lost a staggering $5.6 billion in cryptocurrency scams in 2023. This alarming figure highlights the growing threat of fraud and deception in the digital currency space, as more and more individuals are falling victim to sophisticated schemes designed to exploit their lack of knowledge and understanding of this emerging technology.
Cryptocurrency scams come in many forms, ranging from fake investment opportunities to phishing attacks and Ponzi schemes. These scams often promise high returns with little to no risk, luring unsuspecting victims into parting with their hard-earned money. Once the funds are transferred, the scammers disappear, leaving their victims with nothing but empty promises and a sense of betrayal.
One of the most common types of cryptocurrency scams is the Ponzi scheme, where new investors are promised high returns on their investment, which are paid out using the money from new investors. This unsustainable model eventually collapses, leaving the majority of investors with significant losses. Another prevalent scam is the fake ICO (Initial Coin Offering), where scammers create a fake cryptocurrency and convince investors to buy into it, only to disappear with their funds once they have reached their fundraising goal.
The FBI report serves as a stark reminder of the importance of conducting thorough research and due diligence before investing in any cryptocurrency project. It is crucial for individuals to educate themselves about the risks and potential pitfalls of the digital currency market, as well as to be wary of any investment opportunities that seem too good to be true.
In response to the growing threat of cryptocurrency scams, law enforcement agencies and regulatory bodies are stepping up their efforts to crack down on fraudulent activities in the digital currency space. The FBI has launched several initiatives aimed at combating cryptocurrency fraud, including the establishment of a dedicated task force to investigate and prosecute scammers.
As the popularity of cryptocurrencies continues to rise, it is more important than ever for individuals to exercise caution and vigilance when navigating the digital currency landscape. By staying informed and being aware of the risks associated with investing in cryptocurrencies, individuals can protect themselves from falling victim to scams and fraudsters looking to exploit their lack of knowledge.
