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The US Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center (IC3) recorded a dramatic rise in cryptocurrency-related fraud in 2023, with total losses surpassing $5.6bn — a 45 percent increase from 2022.
A new report from the FBI has highlighted that although cryptocurrency-linked complaints made up only 10 percent of financial fraud cases, these complaints accounted for nearly half of all financial losses.
The report comes after the US government agency formed the Virtual Assets Unit (VAU), a specialised team dedicated to investigating cryptocurrency-related crimes, in 2022.
The VAU centralises the FBI’s cryptocurrency expertise, providing technological equipment, blockchain analysis, virtual asset seizure training and other sophisticated training for FBI personnel.
“Scams targeting investors who use cryptocurrency are skyrocketing in severity and complexity,” said Christopher Wray, FBI director, in a media release.
Geographically, California experienced the highest reported losses at more than $1.15bn, followed by Texas with $411m and Florida with $390m.
By contrast, smaller states such as Vermont and Wyoming saw significantly lower losses, reporting $4.8m and $7.3m, respectively.
The report indicates that although losses were widespread across the United States, some states were hit particularly hard due to their larger populations and higher adoption rates of cryptocurrency.
When comparing specific types of scams, investment fraud was by far the most damaging, accounting for nearly $4bn in losses, or 71 percent of the total.
These schemes often target individuals through social media or online platforms, using fraudulent promises of high returns.
Those aged over 60 reported the highest losses, amounting to more than $1.6bn.
Meanwhile, credit card and cheque fraud and lottery and sweepstakes scams were much smaller in scale, with reported losses of $3.3m and $4.4m, respectively.
Call centre fraud, including tech support and government impersonation scams, also contributed significantly, with losses totalling over $420m.
Crypto Gets Political
The FBI’s latest findings come as crypto advocates emerge as an influential grouping in the US presidential election.
So far, several major crypto figures have rallied behind former President and Republican candidate Donald Trump in the 2024 presidential race.
Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, called Trump “the right choice” for the future of the crypto industry.
Cameron and Tyler Winklevoss, co-founders of Gemini, each pledged $1m in donations to Trump, while Howard Lutnick, CEO of Cantor Fitzgerald, which manages investments for Tether, is part of Trump’s transition team.
However, not all in the crypto world are keen on the idea of another Trump term.
For example, billionaire investor Mark Cuban urged Joe Biden to engage with crypto concerns during his eventually deserted campaign earlier this year and Ripple’s co-founder Chris Larsen supports Vice President Kamala Harris.
Ripple CEO Brad Garlinghouse has, however, sided with the Republicans, stating that the “2024 elections will be the most consequential in crypto’s history”.
