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Investors lost a record $5.6 billion to crypto-related financial crime in 2023, up 45% from 2022, according to a new report from the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center.

According to the report published Monday, investment fraud was the most pervasive – and expensive – type of crypto-related fraud in 2023. Of the more than 69,000 reports of crypto-related crime the agency received last year, nearly half were reports of investment fraud, and investment fraudsters made off with a whopping $4 billion. And while crypto crimes only made up about 10% of the complaints the FBI received, the $5.6 billion figure was roughly half the overall loss by complainants.

Investment fraud schemes typically promise their victims the opportunity to make large returns with minimal risk, and have been on the rise in recent years. Last year, the most prominent type of crypto-related investment fraud was what the FBI described as “confidence-enabled” schemes. Sometimes called “pig butchering,” this type of investment fraud takes place over long periods of time as scammers form relationships with their victims, usually over messaging apps, before encouraging them to invest huge amounts of money in fraudulent cryptocurrency platforms that they are unable to withdraw from.

According to the FBI’s report, many victims of these pig butchering or investment scams have “accumulated massive debt to cover losses from these fraudulent investments.” While victims between the ages of 30-49 filed the most complaints related to investment scams, victims over the age of 60 reported the most losses – over $1.24 billion last year alone.

Though the IC3 takes complaints from U.S. citizens and foreigners alike, American investors accounted for 83% of all the crypto-related fraud reports it received last year, with California residents holding the top spot for both number of complaints (9,522) and amount of losses ($1.2 billion).

Human trafficking nexus

A 2022 investigation by ProPublica – subsequently replicated by the United Nations and others – found that many crypto investment scammers are human trafficking victims held by so-called pig butchering gangs across Southeast Asia and forced to carry out scamming operations.

The FBI’s report includes a warning to U.S. citizens traveling abroad about “the risk of false job advertisements linked to labor trafficking at scam compounds overseas.”

“These compounds hold workers against their will and use intimidation to force the workers to participate in scam operations. Criminal actors post false job advertisements on social media and online employment sites to target people, primarily in Asia,” the report said.

“Workers are often told they must pay for travel and other expenses, meaning the worker starts off in debt. They must then work off the debt while also trying to pay off their room and board. The criminal actors use the worker’s mounting debt and fear of local law enforcement as additional means to control them. Trafficked workers are sometimes sold and transferred between compounds, further adding to their debt," the report continued.