Targeting By Text: Cryptocurrency Fraud Is Exploding, Causing Billions in Losses

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.

A text message, seemingly meant for someone else, started it all. When Ed Hayduk, a Pennsylvania resident, replied, he had no idea it would lead to the loss of his life savings.

It began with a friendly conversation, slowly unfolding over several weeks, as the sender, whom Hayduk had never met, engaged him in light-hearted banter, according to an interview with CBS News Philadelphia.

The fibs started small. The sender, who claimed to be a successful investor, mentioned investing a small sum of money with an advanced crypto trading program that generated substantial returns. To prove it, they showed an image of their phone screen displaying a large credit in an e-wallet.

However, the fibs quickly escalated. After initially investing a small amount at the sender’s request, which Hayduk says was around $500, the scammer, in an attempt to deceive him into investing more, used an online statement generator to fabricate larger and larger investment sums with advanced editing software, making it appear as if the initial small investment had snowballed into an incredible investment gain.

The scammer went to great lengths to fabricate the statements to make them appear legitimate, complete with e-wallet addresses, transaction codes, and an e-wallet application’s logo. They even used an e-wallet to transfer small sums of money to divert any suspicion.

Sadly, the scammer’s efforts were successful. Over time, Hayduk invested a total of $50,000, which he had saved throughout his entire life, and the scammer vanished.

Now, the FBI is sounding the alarm over a concerning trend: cryptocurrency-related investment fraud is causing the biggest financial losses.

According to the FBI’s 2023 Cryptocurrency Fraud Report, which sheds light on the bureau’s efforts in combating cryptocurrency-related crimes, complaints about cryptocurrency-related offenses comprised about 10% of the total financial fraud complaints received by the agency in 2023, the most recent year for which data is available.

However, these complaints accounted for nearly half of the total financial losses.

The report’s estimates indicate that in 2023, Americans lost more than $5.6 billion to cryptocurrency scams—a staggering 45% increase from the previous year.

The FTC’s report for 2023 shows that the total reported losses to investment scams in 2023 were $5.7 billion, the highest among all categories of fraud.