A coalition of 42 state attorneys general, led by New York's Letitia James, is urging Meta to enhance its efforts to combat investment scams on Facebook and WhatsApp, where criminals use fake ads featuring celebrities to lure users into pump-and-dump schemes, causing significant financial losses. They demand increased ad review and policing, or Meta should cease running investment ads altogether. Meta commits to investing in technology and partnerships to fight these scams.
The FBI reported a 53% increase in losses from cryptocurrency investment scams in 2023, totaling $3.94 billion, with the majority of frauds being related to cryptocurrency. The surge in crypto scams can be seen in the context of significant events, including Germany's seizure of over $2 billion in Bitcoin from piracy proceeds and the U.S. government's intention to sell off $132.5 million in Bitcoin seized in connection with the Silk Road scam investigation. Additionally, JP Morgan Chase & Co. halted cryptocurrency-related transactions for its U.K. clients, reflecting growing concerns of financial institutions over crypto-related crimes.
The FBI's Internet Crime Report 2023 revealed that losses from crypto investment scams in the U.S. surged by 53% to $3.94 billion, with overall investment frauds growing by 38% to $4.57 billion. Crypto scams accounted for the majority of these frauds, indicating the significant role of cryptocurrency in online crime. Fraudsters are increasingly utilizing custodial accounts at financial institutions for cryptocurrency exchanges or third-party payment processors to disperse funds quickly, making investment scams the most common internet crime in 2023, totaling over a third of the $12.5 billion in reported losses.
The Federal Trade Commission (FTC) has warned the public about the prevalence of social media scams, which have resulted in losses of over $2.7 billion since 2021. The most common scams involve online shopping fraud, followed by phony investment opportunities and romance cons. The FTC advises individuals to be cautious when encountering suspicious posts and offers tips to prevent falling victim to these scams, such as setting social media accounts to private and being skeptical of requests for money via cryptocurrency or gift cards. Businesses are also urged to be vigilant as scammers may exploit social media advertising.
The head of crypto enforcement at the US Department of Justice (DOJ), Eun Young Choi, has pledged to crack down on illicit behaviour on trading platforms, targeting those that allow "criminal actors to easily profit from their crimes and cash out." The DOJ is focusing on businesses that sidestep anti-money laundering or know-your-customer rules or who do not engage in thorough compliance and risk mitigation. The National Cryptocurrency Enforcement Team (NCET) also aims to bring more enforcement actions against investment scams, which Choi describes as "pig butchering" schemes.
The FBI has warned Gmail and Outlook users to be wary of investment scams that promise "guaranteed returns" as they are often a red flag for fraud. Cybercriminals often ask for upfront cash in exchange for guaranteed future returns, but there is no such thing as a guaranteed return on investment. The FBI also warned people about Ponzi-style schemes, pyramid scams, and Nigerian Letter or 419 schemes. If you spot any of these scams in your inbox, report them to your email provider and make sure they're deleted.
The US Department of Justice has seized virtual currency worth an estimated $112m linked to cryptocurrency investment scams. The virtual currency accounts were allegedly used to launder proceeds of various cryptocurrency confidence scams. Investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31bn. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, increasing a staggering 183% from 2021 to $2.57bn in reported losses last year.
