Losses due to cryptocurrency and BEC scams are soaring
Every type of fraud is on the rise, and 2023 was a particularly devastating year for victims of cryptocurrency and business email compromise (BEC) scams, according to the FBI.
Cryptocurrency fraud
Based on complaints filed to FBI’s Internet Crime Complaint Center (IC3) in 2023, the year saw over $5.6 billion in losses tied to cryptocurrency fraud alone, marking a dramatic 45% increase over 2022 figures.
Criminals are exploiting the difficulties of tracing and recovering cryptocurrency and are using investment scams as their primary weapon.
These scams, which offer individuals large returns on investment with minimal risk, accounted for $3.9 billion—or 71%—of all cryptocurrency fraud losses in 2023. Particularly affected were individuals in their 30s and 40s, but those over 60 reported the largest financial losses, amounting to over $1.24 billion.
Crypto investment scammers contact potential targets via dating and social media apps, professional networking sites, and encrypted messaging apps. They build a connection with the target for weeks and months, before beginning the process of tricking them into “investing”.
Less widespread variations of cryptocurrency scams include liquidity mining schemes and fraudulent play-to-earn gaming applications aimed at draining the victims’ crypto wallet. Also, the FBI warns, private companies that promise victims to recover their funds are also often scam operations.
The FBI has provided advice on how to avoid falling for these scams, and has specifically pointed out the danger of taking investment advice from someone who you have never met in person.
BEC scams
The second report / public service announcement highlights the persistence and scope of business email compromise (BEC) scams, which have cost businesses and individuals over $55 billion globally since 2013!
These scams, which target every type and size of organizations and businesses, exploit compromised email accounts to trick targets into making fraudulent fund transfers.
While these transfers can be reversed by banks if the victim acts quickly, and there are mechanisms for recovering large international wire transfers stolen from US victim bank accounts (e.g., the Financial Fraud Kill Chain, INTERPOL’s Global Rapid Intervention of Payments) and law enforcement teams that can help (e.g., FBI’s Recovery Asset Team), there was a 9% increase in identified global exposed losses between December 2022 and December 2023, according to the FBI.
“In 2023, the IC3 saw a growth in BEC reporting where funds were sent directly to a financial institution housing custodial accounts held by third-party payment processors, or peer-to-peer payment processors, and cryptocurrency exchanges which directly contributed to the increase in global exposed losses.”
The Bureau has shared preventation tips for organizations and has urged those who have fallen for BEC schemes to contact their bank and law enforcement immediately.
Organizations should also implement strategies for combating AI-enhanced BEC attacks.