Cryptocurrency Investment Fraud Is Exploding, Leading to Millions in Losses

Ed Hayduk, a Pennsylvania resident, replied. Over the following weeks, he engaged in what he described to CBS News Philadelphia as a friendly conversation.

The good times are rolling for those committing cryptocurrency-related crimes, but for the victims, the financial impact is anything but funny.

According to the FBI's 2023 Cryptocurrency Fraud Report, cryptocurrency-related investment fraud is leading to growing financial losses and an "alarming" trend that continues to accelerate.

While cryptocurrency-related complaints represent only about 10% of the total financial fraud complaints the FBI received during 2023 (the most recent data available), they account for nearly half of all financial losses, the report says.

This year, the agency had an estimated loss of more than $5.6 billion related to cryptocurrency, which is a 45% increase from 2022 and triple the losses reported in 2021.

To put this in perspective, the FBI's report says that the estimated loss from all other financial fraud types in 2023 was $7.8 billion, compared with more than $5.6 billion related to cryptocurrency, although there were far fewer complaints in categories such as bank fraud and counterfeit goods.

The trend has continued into 2024, with Federal Trade Commission data showing $5.7 billion in losses due to investment scams, more than any other category.

"I started getting texts in December, and they were obviously meant for someone else. But I replied to one and told the person they had the wrong number," said Ed Hayduk, a Pennsylvania resident who described his experience to CBS News Philadelphia.

"We chatted a bit, and over the following week, we had a friendly conversation. Eventually, the person asked me if I wanted to invest a small sum in a crypto wallet."

After a few small wins that were displayed in fake bank statements, the sender urged Hayduk to invest more.

"I began with $1,000, then $3,000, and kept going. In total, I invested $50,000, which was all my savings. But then, the person disappeared."

The FBI's report adds that in 2023, the mean reported loss for cryptocurrency-related complaints was $98,042, compared with a mean loss of $14,078 for other reported financial crimes.

The median reported loss for cryptocurrency was $20,000, while the median loss for other reported financial crimes was $1,000.

The report notes that the large losses reported in connection with cryptocurrency are partly explained by the fact that a significant proportion of cryptocurrency complaints involve romance scams.

The FBI's analysis of its Internet Crime Complaint Center data for 2023 also found that cryptocurrency-related crimes now feature among the top five categories of emerging trends in cybercrime.

CheapInsurance.com reviewed the FBI's 2023 Internet Crime Report and the supplementary Cryptocurrency Fraud Report to analyze how crypto-related crimes cause the biggest losses.