Can cryptocurrency’s rapid growth overshadow the rising fraud and scams in the digital assets space?
- Crypto fraud surged by 45% in 2023, resulting in over $5.6 billion in losses. August saw $313.86 million lost in crypto hacks, mainly due to phishing attacks.
The rapid rise of cryptocurrency has come with both promise and peril.
According to a recent report from the U.S. FBI on 9th September, crypto frauds and scams surged by 45% in 2023 compared to the previous year, resulting in losses exceeding $5.6 billion.
Source: ic3.gov
Scammers have increasingly exploited the fast, irreversible nature of digital transactions to their advantage.
Rise in crypto adoption
The cryptocurrency sector has seen phenomenal growth in 2024, largely driven by the rise of exchange-traded funds (ETFs).
This year’s U.S. election cycle has also featured significant involvement from the crypto space.
A recent survey conducted by Harris Poll on behalf of Grayscale revealed that nearly a third of voters (32%) are now more open to learning about or investing in cryptocurrency.
However, this growth has not come without its drawbacks.
Execs weighing in…
According to a new report from the FBI’s Internet Crime Complaint Center, the increasing adoption of cryptocurrency has also led to a rise in criminal activity, with digital assets being used more frequently by bad actors.
Source: ic3.gov
Remarking on the same, the FBI said,
“While crypto transactions are recorded on publicly available blockchains, allowing law enforcement to easily trace funds, often money is transferred quickly overseas, where U.S. officials can encounter obstacles like lax anti-money laundering laws in certain jurisdictions.”
Additionally, as per the report, India ranked fifth globally for cryptocurrency-related complaints, with 840 cases and losses totaling $44,054,244.
Source: ic3.gov
Interestingly, call center and government impersonation scams contributed to around 10% of those losses.
The report highlighted that individuals over the age of 60 were particularly vulnerable, with losses from this demographic totaling more than $1.6 billion.
Source: ic3.gov
This underscores how scammers are exploiting digital assets, preying on unsuspecting investors.
What’s more to it?
The FBI further added,
“Since cryptocurrencies eliminate the need for financial intermediaries to validate and facilitate transactions, criminals can exploit these characteristics to support illicit activity such as thefts, fraud, and money laundering.”
Providing a solution for the same, FBI Director Christopher Wray noted,
“The best way to help stop these crimes is for people to report them to ic3.gov, even if they did not suffer a financial loss. The information allows us to stay on top of emerging schemes and criminals’ use of the latest technologies, so we can keep the American public informed and go after those who commit these crimes.”
That being said, Blockchain security firm Peckshield also reported that the crypto market experienced more than 10 significant hacks in August, resulting in losses amounting to $313.86 million.
In fact, the majority of these losses stemmed from phishing attacks, specifically unauthorized transfers involving Bitcoin (BTC) and the decentralized stablecoin Dai (DAI).
“The 2 largest hacks, both involving unauthorized transfers (#Phishing), accounted for 93.5% of the total stolen funds, amounting to $293.4 million.”
In light of these developments, the pressing question remains: Will the rise in crypto fraud and hacking drive the push for urgent security reforms and stricter regulations?
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