The FBI’s Internet Crime Complaint Center (IC3) has released its 2023 report, revealing a significant rise in crypto-related fraud and the use of digital assets in cybercrime.

The 2023 IC3 report serves as a comprehensive overview of the current state of internet crime, including the challenges and risks posed by the use of crypto in fraudulent activities.

Crypto investment fraud

The FBI’s data shows a notable uptick in crypto-related investment scams, which have seen losses escalate from $2.57 billion in 2022 to $3.94 billion in 2023 — reflecting a 53% increase.

These scams often lure individuals with the promise of high returns on investments in digital currencies. The report said these scams are becoming increasingly sophisticated, with cybercriminals leveraging the digital asset industry’s growth over the year to lure victims.

This data indicates that victims across all age groups have been targeted by crypto investment fraud, with a notable concentration of complaints among individuals between the ages of 30 and 60.

The report emphasizes the critical importance of using security measures like two-factor or multi-factor authentication to protect against such scams.

It also highlights the need for verifying payment and purchase requests through secure methods beyond email communication to mitigate the risk of falling victim to these schemes.

Rising crypto use in cybercrime

The report also revealed an increase in incidents where fraudsters exploit crypto to facilitate the rapid transfer and dispersal of funds stolen through Business Email Compromise (BEC) schemes.

BEC scams involve manipulating email accounts to authorize fraudulent transactions, often leading to significant financial losses for the victims.

Meanwhile, ransomware attacks, which demand payment in crypto for the decryption of data, have also seen a rise. The report recorded an 18% annual increase in ransomware complaints and a 74% increase in reported losses — totaling $59.6 million in 2023.

The report emphasized that these attacks highlight the persistent threat posed by cybercriminals, particularly to critical infrastructure sectors.

In response to the surge in crypto fraud, the IC3’s Recovery Asset Team (RAT) has played a pivotal role in mitigating financial losses. With a 71% success rate in freezing fraudulent transfers, the RAT managed to secure over $538.39 million of the reported $758.05 million in losses in 2023.

As cybercriminals continue to exploit the digital currency landscape, the need for increased vigilance, improved cybersecurity measures, and greater public awareness has become paramount, the report said. It added that a collective effort is required to safeguard against the evolving threats of the digital age, particularly in the rapidly expanding realm of digital assets.