Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at a recent report by the FBI which notes that cryptocurrency-related fraud has risen to $5.6 billion.
FBI's Internet Crime Complaint Centre Report
The Federal Bureau of Investigations' Internet Crime Complaint Centre (IC3) have released a report which notes that cryptocurrency related fraud has risen to an estimated loss of $5.6 billion. As part of their report, the FBI received over 69,000 complaints involving financial crimes connected to cryptocurrencies. These cryptocurrency-related complaints comprised only 10% of all financial fraud reports but accounted for almost half of the total losses. The agency also reported a 53% increase in losses from cryptocurrency-linked investment fraud schemes. The total losses in this area rose from $2.57 billion in 2022 to $3.96 billion in 2023.
A lot of the victims of these fraudulent schemes were left in severe financial distress, and some even accumulated substantial debt as part of their attempts to recover their losses. Statistics from the report showed that individuals aged 30 to 49 filed the highest number cryptocurrency-investment fraud complaints as around 10,000 appeared in both the 30-39 and 40-49 age groups. Those over the age of 60 suffered the most in terms of financial losses, with over $1.6 billion lost according to the figures from 2023.
The level of exploitation from cryptocurrency fraud is apparent in almost all fraud categories tracked by the IC3. Investment scams were the predominant form of fraud, which accounted for a total of 71% of all cryptocurrency-related losses. The next most common form of fraud came from Call Centres, which often had tech support and government impersonation scams. These represented around 10% of the losses. Given how decentralised cryptocurrency is and that it has the benefits of speed and irreversibility of transactions, they have been a prime target for those looking to scam crypto from individuals as part of criminal activities.
The investment fraud schemes typically promise their victims the opportunity to make large returns with minimal risk. These schemes have been on the rise over the past number of years and the FBI have described some of the most prominent type of crypto-related investment fraud as “confidence-enabled” schemes. Sometimes called “pig butchering,” this type of fraud happens over a long period of time. Often the victims are encouraged to invest huge amounts of money in fraudulent cryptocurrency platforms that they are unable to withdraw from later.
Among the latest fraud schemes one of the more prevalent ones is “liquidity mining scams.” These are scams which involve investors staking their cryptocurrency into a liquidity pool to help facilitate transactions. In exchange for this users receive a share of the trading fees. However, scammers have taken advantage of this traditional concept and have targeted holder of popular cryptocurrencies such as Tether (USDT) and Ethereum (ETH). The scammers will build a rapport with their targets over days or weeks and convince them to link their cryptocurrency wallets to a fake liquidity mining platform by promising lucrative returns of 1-3% daily. When the wallet is connected the scammers are then able to drain the victims wallet of all funds without the wallet owner being aware or needing to give consent.
Another emerging trend is “fraudulent play-to-earn gaming applications.” This is where criminals draw in their unsuspecting victims through the advertising of games which offer cryptocurrency rewards. As part of these scams, the criminals initially create an online relationship with their targets before introducing them to the game where the victim is told they have the chance to earn cryptocurrency by engaging in in-game activities. Participation requires the users to create a cryptocurrency wallet and fund it, and as they victims play the game they can visually see their funds growing in their wallet. This can encourage them to deposit more funds, however, once a user stops adding more funds the scammers use a malicious program embedded in the game to steal their cryptocurrency. Victims will never regain access to their funds but are often told they can recover their money if they pay additional taxes or fees.
This troubling trend has persisted despite law enforcement’s determined efforts to warn users of the risks involved, and crypto related fraud and scams have risen in the past number of years. This is in part due to increasingly sophisticated tactics by criminals. This highlights the need for continued innovation and collaboration in the fight against these increasingly sophisticated schemes.
FBI Director Christopher Wray noted:
“Scams targeting investors who use cryptocurrency are skyrocketing in severity and complexity. The best way to help stop these crimes is for people to report them to ic3.gov, even if they did not suffer a financial loss. The information allows us to stay on top of emerging schemes and criminals’ use of the latest technologies, so we can keep the American public informed and go after those who commit these crimes.”
A report by ProPublica back in 2022, and subsequently replicated by the United Nations and others showed that many crypto investment scammers are human trafficking victims. They are held by so-called pig butchering gangs across Southeast Asia and forced to carry out scamming operations. The FBI report also warned United States citizens about “the risk of false job advertisements linked to labour trafficking at scam compounds overseas.”
The report stated:
“These compounds hold workers against their will and use intimidation to force the workers to participate in scam operations. Criminal actors post false job advertisements on social media and online employment sites to target people, primarily in Asia. Workers are often told they must pay for travel and other expenses, meaning the worker starts off in debt. They must then work off the debt while also trying to pay off their room and board. The criminal actors use the worker’s mounting debt and fear of local law enforcement as additional means to control them. Trafficked workers are sometimes sold and transferred between compounds, further adding to their debt."
Have a great day.
Peace. CryptoGod-1.
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