Crypto Fraud in the US Soars: The Rise of Fake Investment Schemes and AI-Driven Scams
Cryptocurrency fraud is on the rise in the United States, driven by an alarming increase in fake investment schemes, extortion attempts, and sophisticated scams that utilize crypto ATMs and QR codes. Recent findings from the Internet Crime Complaint Center (IC3) of the FBI reveal a record-breaking surge in crypto-related crimes in 2024, showcasing the urgent need for awareness and preventive measures.
Record Highs in Cryptocurrency Fraud
According to the IC3, the year 2024 witnessed a staggering 149,686 complaints related to cryptocurrency fraud, marking an astonishing 115% year-over-year (YoY) increase. The total losses have reached an unprecedented US$9.3 billion, representing a 66% YoY rise.
Investment Scams Lead the Charge
Among the various types of crypto fraud, investment scams emerged as the most profitable category, leading to losses of US$5.8 billion, which constitutes 62% of total crypto fraud losses in 2024. The IC3 recorded approximately 41,557 investment-related complaints, accounting for 27.8% of all crypto fraud reports.
- 47% YoY increase in losses related to investment scams.
- 29% YoY increase in complaints regarding these scams.
Notably, the scheme known as “pig butchering” has become increasingly prevalent. Scammers lure victims into depositing large sums of money into fake investments, ultimately leading to financial ruin. On a global scale, these scams have reportedly cost victims around US$75 billion over the past four years.
Human Cost of Crypto Fraud
The ramifications of investment scams extend beyond financial losses. Many perpetrators are victims of human trafficking, coerced into running these schemes by organized crime syndicates in Southeast Asia. The United Nations estimates that approximately 100,000 individuals from over 50 countries are trapped in scam operations, often facing threats of violence.
Extortion Schemes on the Rise
In 2024, extortion schemes became the most prevalent form of crypto fraud, accounting for 31.8% of all complaints with around 47,557 cases. Despite the high number of incidents, the financial damage was relatively low, with total losses reaching only US$96 million—just 1% of all crypto fraud losses.
Key insights include:
- 59% YoY increase in extortion cases.
- 9% YoY increase in financial losses.
The rise in extortion schemes coincides with the increasing use of artificial intelligence (AI) by cybercriminals. These individuals utilize generative AI to enhance their schemes, making fraudulent activities like social engineering and identity theft more convincing.
Fraudulent Use of Crypto ATMs and QR Codes
Another alarming trend is the exploitation of cryptocurrency ATMs and QR codes. Fraudsters are directing victims to use these tools for payments under false pretenses, leading to significant financial losses.
- In 2024, there were 10,956 complaints related to crypto ATMs, totaling US$246.7 million in losses.
- This represents a 99% increase in cases from 2023.
The most common types of scams involving crypto ATMs include:
- Extortion scams: 4,189 cases
- Tech support scams: 3,037 cases
- Government impersonation: 1,786 cases
- Investment scams: 606 cases
The financial impact of these scams varies, with tech support scams being the most profitable, amassing US$107 million in losses.
Protect Yourself Against Crypto Fraud
As cryptocurrency fraud continues to evolve, it is crucial for individuals to stay informed and vigilant. Here are a few tips to protect yourself:
- Be skeptical of unsolicited investment offers.
- Verify the identity of individuals before sending money.
- Report suspicious activity to authorities.
For more information on cryptocurrency security, visit the FBI’s Internet Crime Complaint Center or check out Consumer Financial Protection Bureau’s tips on protecting your finances.
