Published on: March 16, 2023
The Federal Bureau of Investigation (FBI) has issued a warning about the growing number of cryptocurrency investment scams, urging the public to be vigilant.
Data from the FBI Internet Crime Complaint Center (IC3) indicates that victims lost more than $2 billion to these nefarious schemes in 2022, with criminals often operating from overseas locations.
These scams typically start with a socially-engineered approach, designed to gain the trust of victims. Perpetrators initiate contact through dating apps, social media platforms, professional networking sites, or encrypted messaging apps, using false identities to forge relationships and establish rapport. Initially, they may engage in romance or confidence scams, gradually transitioning to cryptocurrency investment fraud.
Once a sense of trust has been built, scammers introduce the idea of cryptocurrency investment, often claiming to have expert knowledge or connections to help their fans make tons of money. They then lure their targets into using fraudulent websites or apps, which they control, to invest in cryptocurrencies. Scammers walk their victims through the investment process, showcasing fabricated profits and enticing them to invest even more.
However, when victims attempt to withdraw their funds, they are confronted with requests for additional fees or taxes. Even after complying with these demands, victims find themselves unable to recover their money.
Recent variations of these scams include techniques such as liquidity mining and play-to-earn schemes.
The FBI has offered some helpful tips for avoiding these cryptocurrency scams:
- Be cautious with unknown individuals who contact you; do not disclose any financial or personal identifying information (PII) and avoid sending money.
- Exercise skepticism when receiving investment advice from someone you’ve only met online.
- Verify the legitimacy of any investment opportunity, as well as cryptocurrency investment websites and apps, before committing your funds.
- If you believe you have fallen victim to a scam and already invested money, do not pay any additional fees or taxes in an attempt to withdraw your funds.
- Refrain from paying for services that claim they can recover lost funds.