Crypto scams cost Americans a record $5.6 billion last year, with this being the most common type to be cautious of, according to the FBI.

In 2023, billions of dollars were lost by Americans due to cryptocurrency scams, as reported by the United States Federal Bureau of Investigation.

The 2023 Cryptocurrency Fraud Report by the agency reveals that financial losses resulting from the use of cryptocurrencies, including bitcoin, ether, and tether, exceeded $5.6 billion last year. This represents a 45% increase compared to the previous year, as stated in the report.

Despite accounting for only 10% of financial fraud complaints received by the FBI last year, crypto-related crimes resulted in nearly 50% of the total losses Americans suffered from financial schemes.

Americans lost the most money to crypto investment scams

Last year, the highest loss by crypto crime type was $4 billion, which was due to investment scams, according to the FBI's report.

The FBI reports that the widespread promotion of cryptocurrency as an investment vehicle and the associated 'fear of missing out' mindset have created opportunities for criminals to target consumers and retail investors.

Typically, scams involve cyber criminals promising high profits or returns with minimal risk, but no legitimate business can guarantee such outcomes.

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Fraudsters often use dating apps, social media, email, or text messages to communicate with victims for months, building trust before offering fraudulent investment advice about cryptocurrency.

The thieves will entice their victim with a legitimate-looking website, prompting them to create an account and send their funds.

Victims of fake websites are often unable to withdraw their money or earnings, or are forced to pay high fees to receive their funds.

Despite paying fees, many victims are unable to recover a significant portion of their losses, according to the FBI's report.

How to identify potential crypto scams

The FBI's report revealed that American crypto traders of all ages lost billions of dollars due to being scammed. Nevertheless, here are some crucial steps to prevent being swindled.

• Be wary of unsolicited messages from unknown individuals claiming to represent well-known companies, banks, or government agencies. Verify their legitimacy before engaging.

• Beware of fraudulent websites that mimic legitimate businesses or financial institutions. While some may appear legitimate at first, they often contain spelling errors or replace similar-looking text characters in the domain name. For instance, if fraudsters are trying to replicate Coinbase.com, their domain name may be C0inbase.com, with the letter O replaced with a zero.

• The FBI advises caution against investing in crypto with promises of quick wealth growth, as such opportunities are likely to be fraudulent.

If you suspect you've been the victim of financial fraud, crypto-related or otherwise, the FBI advises you to submit a complaint to its internet crime complaint center.

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