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The Scale of Crypto Fraud

Posted  September 27, 2022

Whistleblower associate Liz Soltan, along with Alex Cala of Taxpayers Against Fraud, recently wrote about the massive scale of cryptocurrency fraud on the TAF blog. As use of crypto has increased, so too have scams. Between Jan. 31, 2021 and March 31, 2022, over 46,000 people made reports to the FTC about losing money in crypto fraud, with losses totaling over $1 billion. And that’s just victims who chose to make reports – imagine how many more people lost money without reporting it! Crypto fraud is increasing over time, too, with 60 times more reported crypto scams in 2021 than in 2018.

Crypto scams are big business. According to a Chainalysis Report, illicit addresses received over $14 billion in cryptocurrency in 2021. As Liz and Alex wrote, “If we imagine a fictional country called Cryptofraudia with a GDP of $14 billion, that country would have a higher Gross Domestic Product (GDP) than about 70 countries on the World Bank’s 2021 ranking, including Armenia and Jamaica.”

There’s a misconception that crypto scams hurt only wealthy people with resources to burn. That’s not the case, according to Pew Research. Americans across income levels are investing in crypto – 17% of people in the upper and middle-income categories have used crypto compared to 15% of people in lower income brackets.

Thankfully, regulatory attention to crypto fraud is on the rise as well. In 2022, the SEC doubled the size of its Cyber Unit and renamed it the “Crypto Assets and Cyber Unit.” The Dept. of Justice also created a National Cryptocurrency Enforcement Team. Whistleblowers will have an important role to play in the future as justice comes for crypto scammers.

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Tagged in: CC Lawyers, Cryptocurrency, Financial and Investment Fraud,