In September 2024, The US Federal Bureau of Investigation (FBI) Internet Crime Complaint Center released its 2023 Cryptocurrency Fraud Report, which revealed $5.6 billion in estimated losses connected to cryptocurrency fraud.
The number of public complaints in the US alone regarding cryptocurrency fraud reached 69,000 in 2023, up from 48,000 in 2022.
This figure underscores the growing challenge that digital currencies pose to the financial sector, law enforcement, and investigations professionals. As cryptocurrency continues to gain popularity, the opportunities for fraud have expanded, leading to significant financial repercussions and strain on relevant authorities.
Despite being used predominantly for legitimate purposes, the complexity and anonymity offered by cryptocurrencies also make them an attractive vehicle for a variety of illicit activities, including money laundering, investment scams, ransomware attacks, and theft. The report's findings show that crypto fraud is not only prevalent but also highly lucrative for fraudsters. The losses associated with this crime type show the need for a robust response from those tasked with investigating and preventing financial crimes and the resources to commit to them.
The decentralised nature of cryptocurrencies and the lack of a regulatory framework to govern the sector create unique challenges for tracking and recovering stolen funds, creating knock on effects for victims and law enforcement alike. The report highlights the need for greater regulatory engagement to establish clear guidelines for the cryptocurrency industry and in creating these frameworks we may require Investigations professionals to play a role in shaping these regulations by providing insights into the types of fraud encountered and the tools needed to prevent them.
With billions of dollars at stake, crypto frauds will likely continue to rise in the immediate future. As the digital currency landscape continues to evolve, so too must the strategies employed to safeguard against the sophisticated fraudsters who seek to exploit it.
Those affected by crypto frauds should be vigilant to the threat of recovery scams; those who prey on victims with promises of recovering fraud losses. In some cases, recoveries can be made through robust investigation and legal action, such as the use of civil injunctions.