According to the FBIs latest report from the Internet Crime Complaint Center (IC3), investors lost a record $5.6 billion due to crypto-related financial crimes in 2023, a 45% increase from 2022.
The report, released on Monday, stated that investment fraud was the most common and costly type of crypto-related fraud in 2023. Of the more than 69,000 crypto-related crime reports the agency received last year, nearly half were related to investment fraud, with losses amounting to $4 billion. While crypto crimes represented about 10% of the complaints filed with the FBI, the $5.6 billion figure accounts for nearly half of the total losses reported.
Investment scams typically promise victims high returns with minimal risk, and these types of scams have been increasing in recent years. The most prevalent type of crypto-related investment fraud last year was what the FBI described as “trust-based” scams, also known as “pig butchering” scams. In these schemes, scammers build relationships with victims (often via messaging apps) and then encourage them to invest large sums of money in fraudulent cryptocurrency platforms, from which victims are unable to withdraw funds.
According to the FBI report, many victims of such pig butchering or investment scams “have accumulated significant debt to offset the losses from these fraudulent investments.” While those aged 30 to 49 filed the most complaints related to investment scams, victims over the age of 60 reported the highest losses—exceeding $1.24 billion in just one year.
Although IC3 accepts complaints from both U.S. citizens and foreign nationals, U.S. investors accounted for 83% of all crypto-related fraud reports received last year. California residents led in both the number of complaints (9,522) and the amount of losses ($1.2 billion).
Human Trafficking Connection
A 2022 investigation by ProPublica, later followed by probes from organizations like the United Nations, revealed that many cryptocurrency investment scammers are victims of human trafficking, held captive by so-called “pig butchering” gangs across Southeast Asia and forced to carry out fraud.
The FBI report warns U.S. citizens traveling abroad of the risk of false recruitment advertisements linked to labor trafficking at overseas scam operations.
“These work sites imprison workers and use intimidation tactics to force them into participating in fraudulent schemes. Criminals post fake job ads on social media and online job boards, primarily targeting people in Asia,” the report said.
“Workers are often told they must pay for transportation and other costs, leaving them in debt from the start. They are then required to work off their debt while also covering food and lodging expenses. Criminals use the increasing debt and fear of local law enforcement as additional means of control. Trafficked workers are sometimes sold and transferred between different work sites, further increasing their debt,” the report continued.
What was the most common type of crypto-related investment fraud in 2023 according to the FBI, which often involves scammers building trust through messaging apps and encouraging large investments in fraudulent platforms？
A) Ponzi Scheme
B) Pump and Dump Scheme
C) Pig Butchering Scheme
D) Phishing Attack