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Americans lost $10.3 billion to online fraud by 2022, with crypto investment losses accounting for around 25%.
Crypto scams up 183% in 2022
The FBI report shows that online fraud related to crypto investments jumped to $2.57 billion in 2022 from $907 million in 2021, an increase of 183%.
Data compiled by the internet crime complaint center (IC3), an agency in charge of law enforcement and national security, reveals that $10.3 billion was lost to online fraud in 2022, up from $6.9 billion in 2021.
The FBI also notes a spike in cryptocurrency investment as fraudsters take advantage of the rise and exploration of the industry by new users.
According to the report, most of the victims who report crypto scams are between the ages of 30 and 49.
How fraudsters steal billions
The FBI highlights 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 purge their assets.
Fraudsters also hack social media accounts to access victims’ profiles before targeting their friends and using their credentials to make fake investment offers.
In some cases, the FBI noted fraudsters may also contact real estate agents with offers to buy expensive homes using crypto. When agents agree to join forces, scammers convince them that they own property worth millions.
Scammers also impersonate celebrities and build fake friendships with victims using fake investment opportunities.
In some cases, scammers also come up with fake jobs. In this arrangement, the victim is coaxed into applying for a non-existent job with an investment firm. However, they are given investment advice instead of being offered a job. Their goal is to steal from potential suitors.
Crypto hacking and project failure in 2022
In 2022, crypto fraud and related activities cost investors nearly $3.5 billion. A report called “Cryptocurrency Scams 2022” by Privacy Affairs emphasizes the effect of fraud on the market. Considering a series of failed stablecoins, collapsing exchanges, and crypto hacks, 2022 could be the worst year in crypto yet.
Key events of crypto winter 2022 included the crash of popular exchange FTX in November, which affected crypto prices and impacted several blockchain businesses. Previously, 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 spike.
Apart from banks, several blockchain companies have also reported billions of dollars in losses from security breaches and exploits. The most recent attack was on lending protocol, Euler Finance, which was hacked by more than $197 million.
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