According to a report released on Monday by the FBI, Americans lost $5.6 billion in cryptocurrency scams between 2023 and 2024.
James Barnacle is the FBI’s deputy assistant director for criminal investigations. He says that scammers will use sophisticated tactics to convince victims to invest in cryptocurrency.
Barnacle explained that “over time, the victim’s confidence is built up by the fraudsters.” “They’re friends. They met online or on social media. They met via text message. The fraudster offers an investment after they develop a relationship.”
Barnacle explained that the victim will then be given a web application to deposit their money into.
He said: “Everyone is reading about these crypto millionaires. People are searching for the next great investment opportunity and fraudsters use that to their advantage.”
Barnacle says that these schemes have devastating effects.
Some people get mortgages, equity lines of credit, or third mortgages. He said that people withdraw money from their 401(k), IRA, or other retirement accounts and invest it in these investment schemes. “They keep investing more and more,” he added. “We’re seeing people lose $4 million, $5 million, $6 million. “We’re seeing people who are complaining and reach out to us asking for $2,000… it’s an enormous impact on the victim.”
The report revealed that scams were most common among people aged 60 and older. They lost $1.6 billion by 2023.
Barnacle said that older people have more time to themselves. They’re home or in an assisted-living facility and are therefore easier to target. Their availability is greater than someone who doesn’t stay at home. Fraudsters are very good at building rapport.
He noted that scammers also provide “detailed instructions” on how to deposit money at a cryptocurrency kiosk, and then transfer the cash to their crypto wallet.
Barnacle explained, “You would not think that your 89-year-old grandmother would visit a kiosk. But we see it every day.”
Barnacle stated that the chances of someone recovering the money were “slim”.
To stop fraudsters from stealing money from victims, FBI officials are training state, local, and federal law enforcement officers to better recognize the warning signs of cryptocurrency scams. They are also asking banks to be on the lookout for warnings from their customers.
Barnicle asked: “They come into your bank saying they need money for home renovation projects [but] is it reasonable that they continue to withdraw significant amounts of cash, even though some of them may be elderly people who live in nursing homes?”
Since January, the FBI notified over 3,000 victims that they had been scammed. However, this number is likely to be underestimated, as many people are unaware they have been scammed.
Barnacle stated that 75% of the 3,000 people he had notified this year were unaware they were fraud victims.
