Cryptocurrency scams drive major spike in investment fraud

Various types of fraud occur through the cryptocurrency nexus, the peer-to-peer network that uses blockchain technology to conduct transactions. Of particular concern is the rise in investment-related fraud, which accounted for nearly $4 billion in losses in 2023—approximately 71% of all cryptocurrency-related losses reported to the FBI. These scams often involve investments in fake assets or phony projects.

Other types of crimes that use cryptocurrency include tech support, data breaches, and extortion, followed by romance- or confidence-related crimes.

This alone represents a 53% increase from the total losses from investment fraud reported in 2022.

"The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals," Michael D. Nordwall, assistant director of the FBI's Criminal Investigation Division, said in the Cryptocurrency Fraud Report. The same factors that make cryptocurrency scams possible also create significant challenges for recovering stolen funds.

Pig butchering and other social scams

Socially engineered scams have become increasingly common, where criminals build trust with victims before introducing fraudulent investment opportunities. One of the most common investment scams is known as "pig butchering," in which perpetrators use phishing techniques to gain the trust of victims through dating apps, social media, and professional networking sites. They may also send unsolicited messages through encrypted platforms such as WhatsApp, Telegram, and Signal.

Ongoing correspondence can draw victims into a trap—even those who think they're not susceptible to a scammer's tactics. Sometimes, the communication may revolve around a fictitious romantic relationship, further manipulating victims into investing in fake cryptocurrency projects.

"Scammers will build trust for weeks and months before trying to convince you to invest in cryptocurrency," the report warns. "They will use text messages, video chats, phone calls, and emails to lure you in."

Once trust is established, victims are directed to fraudulent websites or apps where they're shown fake profits and encouraged to invest. When they attempt to withdraw their supposed earnings, they're told they need to pay additional fees or taxes—money they'll never see again.

AI, call centers, and sophisticated deception

Several factors, including wider access to cryptocurrency exchanges and the rise of artificial intelligence, drive the surge in investment scams. The District of Columbia Department of Insurance, Securities and Banking identified cases where AI has been used to clone voices, alter images, spread false information, and create fake videos, creating more realistic and sophisticated scams. Sometimes, AI can be used to impersonate family members, friends, or famous people.

A recent multinational investigation, coordinated by the Organized Crime and Corruption Reporting Project, exposed the inner workings of two call centers that perpetrated these scams. Victims were often lured through fake social media ads, particularly on Facebook, where fraudulent news articles featured well-known public figures promoting schemes to "earn money while you sleep."

The OCCRP found that these large-scale scams operated like professionally run businesses, relying on marketing firms, payment service providers, and software companies to sustain their activities and create a veneer of professionalism. Fake identities, forged paperwork, and phony call centers add to the illusions—swindling victims out of their funds.

"Scammer's tactics are constantly evolving," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in a statement.

Who's being targeted—and how to stay safe

While people aged 30 to 49 filed the most cryptocurrency investment fraud complaints, victims over 60 reported the highest losses—more than $1.24 billion. This aligns with broader trends where financial scams often disproportionately impact older Americans. For example, last October, the FTC reported to Congress that consumers 60 and older were five times more likely than younger people to report losing money on a tech support scam—a common type of fraud where the scammer pretends to offer the victim technical support, only to extort then or compromise their info once the victim has granted access to their system.

The FBI emphasizes several red flags that could indicate fraud: Be wary of investment opportunities from people you've never met in person who require digital assets to open an account or promise guaranteed or excessive returns with minimal risk. Scammers typically create pressure to act quickly to bypass rational thinking and may request cryptocurrency platforms for anonymous transactions.

As cryptocurrency adoption grows, so does the sophistication of these scams. The FBI recommends verifying the legitimacy of any investment opportunity and being wary of suspicious-looking apps or websites with names that mimic legitimate financial institutions.

If you believe you've been victimized, file a complaint through IC3.gov with details about the transactions, including cryptocurrency addresses, transaction hashes, and information about the scammer. Alternatively, ReportFraud.ftc.gov can be used to report fraud to the FTC.

The bottom line: Be wary of the promise of fast, easy money—on any platform.

As the report cautions, "If an investment opportunity sounds too good to be true, it likely is."

Story editing by Alizah Salario. Copy editing by Paris Close. Photo selection by Ania Antecka.