Americans lost $10.3b to online scams in 2022, with crypto investment losses accounting for about 25%.
Crypto fraud rose 183% in 2022
The FBI report showed that online scams relating to crypto investments shot up to $2.57b in 2022 from $907m in 2021, a 183% increase.
The data gathered by the internet crime complaint center (IC3), an agency responsible for law enforcement and national security, revealed that $10.3b was lost to online scammers in 2022, up from $6.9b in 2021.
The FBI also noted a spike in cryptocurrency investments as scammers took advantage of the industry’s nascence and exploration by new users.
According to the report, most victims reporting crypto scams were between 30 and 49 years old.
How scammers stole billions
The FBI highlighted the five most common investment scams in 2022, including liquidity mining. Here, a victim links their cryptocurrency wallet to a fake liquidity mining service, allowing the scammer to wipe clean their assets.
Scammers also hacked social media accounts to access a victim’s profile before targeting their friends and using their trust to perpetrate a false investment offer.
In some instances, the FBI noted scammers could also contact a real estate agent with an offer to buy an expensive home using crypto. When the agent agrees to join, the scammer convinces them they own property worth millions.
Fraudsters also impersonated celebrities and built fake friendships with victims using phony investment opportunities.
In some instances, fraudsters also came up with fake employment. In this arrangement, the victim was lured to apply for non-existent job vacancies at investment firms. However, they were given investment advice instead of being offered a job. Their goal was to eventually steal from hopeful applicants.
Crypto hacks and project failures in 2022
In 2022, crypto frauds and related activities cost investors nearly $3.5b. A report named “Cryptocurrency Scams of 2022” by Privacy Affairs emphasized fraud’s effect on the market. Considering the series of failing stablecoins, collapsing exchanges, and crypto hacks, 2022 could be the worst year in crypto.
Significant events of crypto winter 2022 include the fall of popular exchange FTX in November, which affected crypto prices and impacted several blockchain businesses. Earlier on, LUNA and UST, an algorithmic stablecoin, collapsed.
In early 2023, crypto banks, including Silvergate bank and Silicon Valley Bank (SVB), closed shop and experienced a bank run. This spread fear and panic in the market, causing cryptocurrency prices to surge.
Besides banks, several blockchain companies also reported billions of losses in dollars from security breaches and exploits. The most recent attack is on the lending protocol, Euler Finance, which was hacked for over $197m.