A new FBI report has shown that, in 2023, reported losses from cryptocurrency-related fraud exceeded USD 5.6 billion, marking a 45% increase from the previous year. This rise is largely attributed to a surge in crypto-related investment scams, with victims reporting nearly USD 4 billion in losses related to these schemes compared to USD 2.57 billion in 2022.

This report represents the first time the FBI has released a document specifically focused on cryptocurrency fraud, distinct from its broader annual fraud data. Crypto-related fraud accounted for nearly half of the record USD 12.5 billion in online fraud losses reported to the FBI in 2023. The FBI aims to increase public awareness about cryptocurrency fraud and encourage faster reporting of such incidents to facilitate the recovery of stolen funds.

Many victims have incurred significant debt due to these fraudulent investments. The report highlights a persistent threat from international scammers, with cryptocurrencies being used extensively in various fraudulent schemes. The FBI investigates numerous digital crimes, including ransomware attacks and tech-support scams, which collectively cost the global economy billions annually.

The new report indicates that cryptocurrency has become a preferred medium for these types of crimes. The prevalence of investment scams involving cryptocurrency has expanded globally, with scammers from various regions exploiting the trust of victims to funnel investments into fake ventures. Victims can range across all age groups, with individuals over 60 reporting USD 1.6 billion in losses in 2023.

Regulatory and legal response In response to the growing prevalence of cryptocurrency fraud, regulatory bodies in both the US and internationally have implemented a range of measures to combat this issue. In the US, the Securities and Exchange Commission (SEC) has introduced stricter guidelines for cryptocurrency exchanges and initial coin offerings (ICOs), emphasising transparency and investor protection. The Commodity Futures Trading Commission (CFTC) has also increased its oversight of cryptocurrency derivatives markets, aiming to prevent market manipulation and fraud.

Additionally, the Financial Crimes Enforcement Network (FinCEN) has issued new regulations requiring cryptocurrency exchanges to adhere to AML standards, improving the scrutiny of transactions and user identities. Internationally, several countries have enacted or proposed regulations to address cryptocurrency fraud. The European Union has introduced the Markets in Crypto-Assets (MiCA) regulation, which seeks to create a comprehensive regulatory framework for digital assets across member states.

Similarly, in Asia, countries like Singapore and South Korea have tightened their regulations on cryptocurrency exchanges and initial coin offerings to protect investors and prevent illicit activities. These global efforts reflect a concerted push to standardise regulatory practices and improve cooperation among nations in tackling the challenges posed by cryptocurrency fraud. .