The Federal Bureau of Investigation's (FBI's) Internet Crime Complaint Center (IC3) latest report highlights an unsettling rise in cryptocurrency-related fraud. Estimated losses have skyrocketed to a staggering $5.6 billion.

In this detailed report, the FBI disclosed that the IC3 received over 69,000 complaints related to financial crimes involving cryptocurrencies such as Bitcoin, Ethereum, and Tether.

While these cryptocurrency-related complaints constituted only 10% of all financial fraud reports, they accounted for nearly half of the total financial losses.

Losses in cryptocurrency-linked investment fraud schemes increased by 53%. Total losses surged from $2.57 billion in 2022 to $3.96 billion in 2023. This sharp rise highlights the growing threat posed by these fraudulent schemes.

FBI Says Older Individuals Suffered Greatest Financial Losses

Many victims of these scams were left in severe financial distress. Some even accumulated substantial debt in an attempt to recover from their losses.

The report found that individuals aged 30 to 49 filed the highest number of cryptocurrency-investment fraud complaints, with about 5,200 reports in each of the 30-39 and 40-49 age groups.

However, older individuals—those over the age of 60—suffered the greatest financial losses, reporting more than $1.24 billion in total.

Cryptocurrency exploitation spans nearly all fraud categories tracked by the IC3. Investment scams were the most dominant, accounting for approximately 71% of all cryptocurrency-related losses.

Call center frauds, which often involved tech support and government impersonation scams, represented about 10% of these losses.

Cryptocurrencies' decentralized nature, combined with the speed and irreversibility of transactions and the ability to move funds globally, made them a prime target for criminal activities.

Scams Include Liquidity Mining, Fraudulent Play-to-Earn Gaming

Among the latest fraudulent schemes, liquidity mining scams have become increasingly prevalent. In its legitimate form, liquidity mining involves investors staking their cryptocurrency in a liquidity pool to help facilitate transactions in exchange for a share of trading fees.

Scammers have taken advantage of this concept, mainly targeting holders of popular cryptocurrencies like Tether and Ethereum.

Fraudsters build a rapport with their targets over days or weeks, convincing them to link their cryptocurrency wallets to a fake liquidity mining platform by promising lucrative returns of 1-3% daily. Once the wallet is connected, the scammers drain the victim's funds without their knowledge or consent.

Another emerging trend is fraudulent play-to-earn gaming applications. Criminals lure unsuspecting victims by advertising games that offer cryptocurrency rewards.

In these scams, criminals first form an online relationship with the target and then introduce them to a game in which they can earn cryptocurrency by engaging in in-game activities, like growing crops on a virtual farm.

Players are instructed to create and fund a cryptocurrency wallet to participate. As the victims play, they see their in-game rewards growing, which prompts them to deposit more money.

However, once they stop adding funds, the scammers use a malicious program embedded in the game to steal their cryptocurrency. Victims are often told they can recover their money by paying additional taxes or fees, but they never regain access to their funds.