Rising crypto scams leave Americans reeling from billions in losses

Cryptocurrency was supposed to change the way we handle money. We kept hearing from influencers and “experts” about how it would give you full control of your cash and how secure it is. 

But scammers have shown that crypto isn’t as foolproof as promised. It’s actually pretty easy to steal. The FBI reported Americans lost $5.6 billion to crypto scams in 2023, a 45% jump from the year before. 

Over 69,000 people filed complaints with the Feds’ Internet Crime Complaint Center (IC3) last year, and most of them were aged 60 and up.

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The most common crypto scams

The FBI’s IC3 report highlighted various crypto scams, most of which involve strong social engineering tactics.

Investment fraud

First off, we have investment fraud. Scammers contact you via call, text, or email, promising huge (unheard of) profits if you invest in cryptocurrency. They tell you that everyone is investing and making massive returns, and if you don’t, you will miss out. This usually works on people who are eager to invest but aren’t sure how to get started — in other words, those who have the cash to invest but aren’t very tech-savvy. Losses from investment fraud schemes reported to the IC3 rose from $2.57 billion in 2022 to $3.96 billion in 2023, an increase of 53%.

Relationship-building scams

Scammers sometimes build a relationship with you to make the scam seem legit. They use dating apps, social media, professional networking sites or encrypted messaging apps to get close to their targets. Once they’ve gained your trust, they bring up cryptocurrency investment. They might claim they have some expertise or know an expert who can help you make big money. Then, they push you to use fake websites or apps — ones they control — to invest in crypto. 

To make things even worse, scammers sometimes go after the same people again by pretending to be fake crypto-recovery specialists. They promise to help recover the money the original scammers stole but end up taking even more cash and disappearing with that, too. “There is one thing these scammers typically will not do — they will not meet with you in real life,” the Feds said.

Chart detailing cryptocurrency complaints. (IC3)

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Scammers are targeting elderly folks

Crypto scammers are primarily targeting people over 60, especially those who aren’t very familiar with technology. According to the Feds, most of the complaints they received in 2023 — about 16,806 — came from this age group. In total, they lost over $1.6 billion to these scams. Looking at complaints across all age groups, it’s clear the losses are staggering. Here’s a breakdown of the 2023 complaints and losses by age group:

• Under 20: 858 complaints, $14.7 million in losses
• 20-29: 6,258 complaints, $168.6 million in losses
• 30-39: 10,849 complaints, $693.7 million in losses
• 40-49: 10,318 complaints, $843.9 million in losses
• 50-59: 8,918 complaints, $901.1 million in losses
• Over 60: 16,806 complaints, $1.65 billion in losses

“While individuals in the age ranges of 30–39 and 40–49 filed the most cryptocurrency-investment fraud complaints (approximately 5,200 reports in each age group), complainants over the age of 60 reported the highest losses (over $1.24 billion),” noted the FBI report. 

Illustration of cryptocurrency scammer. (Kurt “CyberGuy” Knutsson)

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What you need to know before getting yourself into crypto

There’s a lot about crypto and crypto scams that we don’t know, so to gain some expert insights, I asked Paige Schaffer, CEO of Iris Powered by Generali, provider of a proprietary identity and cyber protection platform, some questions that many of us have in mind.

1. What steps should someone take if they suspect they’ve fallen victim to a cryptocurrency scam?

“If you suspect that you’ve fallen victim to a cryptocurrency scam, it’s crucial to act quickly to mitigate potential losses. First, immediately stop all transactions with the suspected scammer — this includes halting any ongoing investments, withdrawals, or deposits to prevent further loss. Next, change your passwords and enable two-factor authentication on all your related accounts if you haven’t done so already. This includes your email and any other linked financial accounts.”

Also, consider using a password manager to securely store and generate complex passwords. It will help you to create unique and difficult-to-crack passwords that a hacker could never guess. Second, it also keeps track of all your passwords in one place and fills passwords in for you when you’re logging into an account so that you never have to remember them yourself. The fewer passwords you remember, the less likely you will be to reuse them for your accounts. Get more details about my best expert-reviewed password managers of 2024 here.

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2. How can individuals verify the legitimacy of a cryptocurrency exchange or platform before investing?

“Before you invest in crypto, search online for the name of the company or person and the cryptocurrency name, plus words like ‘review,’ ‘scam’ or ‘complaint.’ See what others are saying. You can also check for any news articles about the exchange. Positive news about partnerships or technological advancements can be a good sign, whereas reports of security breaches or legal issues are red flags.”

Popular exchanges like Binance, Coinbase and Kraken have a history of security and transparency, unlike many smaller, lesser-known platforms that could be fraudulent or easily hacked.

3. Are there any specific security measures people should implement to protect their digital wallets and cryptocurrency assets?

“Strong, unique passwords and two-factor authentication are a must for digital wallets and crypto assets. We also recommend hardware wallets for storing large amounts of crypto assets, as these are not connected to the internet and provide superior protection against hacking. It’s important to regularly update wallet software to ensure vulnerabilities are patched.”

4. What advice would you give to someone who’s interested in investing in cryptocurrency but is concerned about potential scams?

“It’s wise to be concerned about scams in the crypto universe, so you’re already on the right track! Keep this mindset but know that there is a safe way to invest in cryptocurrency. Start by first investing time in researching and understanding different cryptocurrencies, including their market trends, technological foundations, and community and developer activities. Only use reputable exchanges and wallets which adhere to regulatory standards and offer robust security measures.”

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5 other important ways to protect yourself from crypto scams

1. Be skeptical of “too good to be true” offers: One of the biggest red flags in crypto scams is the promise of guaranteed, massive returns with little or no risk. Scammers will often entice people with claims of doubling or tripling their investments in a short period. Always approach these offers cautiously, as legitimate investments don’t guarantee profits. 

2. Avoid sharing personal information: Your personal information is your gateway to your crypto funds, and scammers often try to trick people into sharing sensitive details like private keys, passwords or wallet information. Never share this data with anyone, even if they claim to be from a legitimate company or exchange. Be especially cautious of phishing emails or fake customer service representatives asking for your details — reputable companies will never ask for this kind of information.

3. Have strong antivirus software installed on all of your devices: The best way to safeguard yourself from malicious links that install malware, potentially accessing your private information, is to have antivirus software installed on all your devices. This protection can also alert you to phishing emails and ransomware scams, keeping your personal information and digital assets safe. Get my picks for the best 2024 antivirus protection winners for your Windows, Mac, Android & iOS devices.

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4. Watch out for unsolicited contacts: Scammers often reach out to potential victims through social media, dating apps, professional networking platforms or even email, pretending to be friends, financial advisers or crypto experts. If someone you don’t know offers an investment opportunity, claims to have inside knowledge or urges you to act quickly, it’s a major red flag.

5. Remove your personal information from the internet: Getting your personal information off the web is key to stopping scammers from contacting you in the first place. With data removal services, you can remove your data from databases and websites that expose it to cybercriminals. By taking this step, you reduce the risk of being targeted by scammers who might otherwise use your info to trick you into downloading malware or giving up passwords to your personal accounts. Check out my top picks for data removal services here.

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Kurt’s key takeaway

While cryptocurrency might seem like a great way to make money, it’s full of risks, and I’d say steer clear unless you’re really tech-savvy. I’m not against the technology itself — it does have the potential to deliver on all the promises. However, since crypto cuts out intermediaries like banks, it also opens the door for criminals to take advantage of it for things like theft, fraud, and money laundering.

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