Americans lost more than $5.6 billion to cryptocurrency scams last year

The Federal Bureau of Investigation (FBI) released a report on Monday (September 9) saying that Americans were defrauded of more than $5.6 billion in cryptocurrency fraud last year, a 45% increase from losses in 2022.

According to the FBI, the agency received nearly 70,000 complaints from victims of financial scams involving Bitcoin, Ethereum and other cryptocurrencies in 2023. The most rampant fraud schemes were investment scams, accounting for $3.96 billion of these losses.

"The decentralized nature of cryptocurrencies, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrencies a favored vehicle for criminals while creating challenges in recovering stolen funds," wrote Michael Nordwall, assistant director of the FBI's Criminal Investigation Division.

The FBI said scammers often spend weeks or months building a trusting relationship through dating apps or social media before suggesting investing in cryptocurrency. Once the relationship is established, they convince their targets to use fake websites or apps to invest their money, sometimes even allowing victims to withdraw small amounts early on to make the transaction seem legitimate.

At Beston International Law Firm, we are committed to fighting cryptocurrency scams and pursuing those responsible to hold individuals and organizations accountable for their actions. As experienced cryptocurrency attorneys serving clients across the country, we can apply over 100 years of legal experience to help victims seek justice.

Have you ever been scammed and lost the trust of people around you? Call (929) 841-6928 today to schedule a free consultation with our experienced legal team.

Defining the Problem: Cryptocurrency investment scams

Scammers are always looking for new ways to steal your money, and the massive growth of cryptocurrency in recent years has created plenty of opportunities for fraud. Crypto crime had a record-breaking year in 2021 — fraudsters stole $14 billion in cryptocurrency that year, according to a report from blockchain data firm Chainalysis. If you’re interested in crypto, it’s important to be aware of the risks. Read on to learn more about common crypto scams, how to spot them, and how to avoid them.

Hazing rituals may include any of the following:

• Fake Website:
  Scammers sometimes create fake cryptocurrency exchanges or fake versions of official crypto wallets to defraud unsuspecting victims. These fake websites often have domain names that are similar but slightly different to the website they are trying to mimic. They look very similar to legitimate websites, making them difficult to distinguish.
• Phishing scams:
  Crypto phishing scams usually target information related to online wallets. Scammers target crypto wallet private keys, which are required to access the funds within the wallet. Their method of operation is similar to other phishing attempts and is related to the fake websites mentioned above. They send emails to lure recipients to visit specially created websites that ask them to enter private key information. Once the hackers have this information, they steal the cryptocurrency in these wallets.
• Fake apps:
  Another common way scammers defraud cryptocurrency investors is by offering fake apps for download through Google Play and the Apple App Store. While these fake apps are quickly discovered and removed, that doesn’t mean they don’t impact many bottom lines. Thousands of people have downloaded fake cryptocurrency apps.
• Cloud Mining Scams:
  Cloud mining is when a company allows you to rent the mining hardware they operate in exchange for a fixed fee and a share of the revenue you should receive. In theory, this allows people to mine remotely without purchasing expensive mining hardware. However, many cloud mining companies are scams or ineffective at best — as you will end up losing money or making less than implied.
• Fraudulent Initial Coin Offerings (ICOs):
  An initial coin offering, or ICO, is a way for startup crypto companies to raise money from future users. Typically, customers are promised a discount on a new cryptocurrency in exchange for sending an active cryptocurrency like Bitcoin or another popular cryptocurrency. Some ICOs have proven to be frauds, with criminals going to great lengths to defraud investors, such as renting fake offices and producing high-profile marketing materials.

How to Spot a Cryptocurrency Scam

Promises of guaranteed returns: No financial investment can guarantee future returns, as investments can go down as well as up. Any cryptocurrency product that promises you will definitely make money is a red flag.

Over-marketing: All businesses market themselves. However, one way cryptocurrency fraudsters attract people is by investing heavily in marketing – online ads, paid influencers, offline promotions, etc. This is to reach as many people as possible in the shortest possible time in order to raise money quickly. If you feel like the marketing for a cryptocurrency seems too heavy, or the claims made are exaggerated but unsupported, pause and do further research.

How to protect yourself from cryptocurrency scams

Many cryptocurrency scams are sophisticated and convincing. Here are some steps you can take to protect yourself:

Protect your wallet: To invest in cryptocurrencies, you need a wallet with a private key. If a company asks you to share your key in order to participate in an investment opportunity, it is most likely a scam. Keep your wallet key confidential.

Be wary of social media ads: Cryptocurrency scammers often use social media to promote their fraudulent schemes. They may use unauthorized images of celebrities or well-known business people to create a sense of legitimacy, or may promise giveaways or free cash. When seeing cryptocurrency opportunities promoted on social media, maintain a healthy level of skepticism and do your due diligence.

Too good to be true: Companies that promise guaranteed returns or make you rich overnight are likely scams. If something seems too good to be true, proceed with caution.

What to do if you become a victim of a cryptocurrency scam

If you or a loved one has been the victim of a cryptocurrency scam, you can hire an attorney from Beston International Law Firm to handle the case on your behalf and help you recover all your losses.

Our legal team has a team of experienced lawyers dedicated to protecting our clients’ interests and helping them navigate complex legal issues.

Need to speak with an experienced lawyer? Call (929) 841-6928 or contact us online for more information about our legal services.