Crypto Scams Are Exploding, Leading to Growing Financial Losses

It started with a text message, seemingly meant for someone else. Ed Hayduk, a Pennsylvania resident, replied.

A simple text message, seemingly a case of mistaken identity, kicked off a chain of events that would leave Ed Hayduk, a resident of Pennsylvania, in the lurch with a staggering $50,000 lost to a cryptocurrency scam.

As Hayduk described to CBS News Philadelphia, the text message, which he received in March, was part of a broader scam to defraud investors.

It started with a text message, seemingly meant for someone else. Ed Hayduk, a Pennsylvania resident, replied. Over the following weeks, he engaged in what he described to CBS News Philadelphia as a friendly conversation. Eventually, the sender convinced him to invest a small sum in a crypto wallet. Fake statements showing high returns persuaded Hayduk to invest more—ultimately totaling $50,000.

Then, the person behind the messages disappeared.

In an alarming trend that continues to accelerate, cryptocurrency-related investment fraud is leading to growing financial losses, according to the FBI’s 2023 Cryptocurrency Fraud Report.

The report highlights that while cryptocurrency-related complaints constitute about 10% of the total financial fraud complaints received by the FBI in 2023 (the most recent year for which complete data is available), they contribute to nearly half of the financial losses.

The agency estimates that over $5.6 billion was lost to cryptocurrency scams in 2023, an increase of more than 45% from the previous year. This concerning trend has continued into 2024, with the Federal Trade Commission reporting $5.7 billion in losses due to investment scams in the first quarter alone, the highest among all scam categories.

CheapInsurance.com undertook an analysis of the FBI’s 2023 Internet Crime Report and the supplementary Cryptocurrency Fraud Report to shed light on how crypto-related crimes are causing the biggest financial losses.