Cryptocurrency-Related Scams Cost Victims Five Times More Than Other Internet Crimes in 2022: Study

Bitcoin coins are seen at a stand during the Bitcoin Conference 2023, in Miami Beach, Florida, on May 19, 2023. Marco Bello/Reuters/File Photo

Victims of cryptocurrency scams lost five times more money last year when compared to other types of internet crimes, according to the findings of a recent study from cybersecurity company Surfshark.

The study, published on June 6, analyzed open-source information from the Federal Bureau of Investigation (FBI), including the 2022 internet crime report’s data on internet crimes in 50 U.S. states and the District of Columbia.

It found that cryptocurrency scams in the United States had cost each victim an average of $86,000 per year when compared to scams involving traditional payment methods, who lost an average loss of $16,000 per year.

The disparity may be down to blockchain immutability, as crypto payments are permanent and not reversible, Surfshark noted.

Overall in 2022, more than $2.3 billion worth of crypto was lost to internet crimes across America, despite just 6 percent of internet crime victims in the United States paying scammers in crypto.

This is down to the “substantial financial impact of these scams” which resulted in them representing a significant 24 percent share of all cybercrime-related financial losses last year.

The FBI pegs the total losses at just over $2.4 billion in its 2022 internet crime report (pdf), which noted that cryptocurrency scams witnessed an “unprecedented” rise last year. Overall, victims suffered more than $10.2 billion in financial losses owing to online scams in 2022, up from $6.9 billion in 2021, the FBI found.

Those losses were likely driven in part by the $320 million that hackers made off with in February last year from cryptocurrency exchange platform Wormhole and the $570 million that was stolen from Binance, the world’s biggest cryptocurrency exchange.

Crypto Scams Across the States

Sam Bankman-Fried’s failed cryptocurrency exchange FTX also reported around $413 million worth of stolen cryptocurrency last year, although an investigation into that alleged hack remains ongoing.

According to Surfshark’s study, the amount of money lost to crypto-related scams varied drastically from state to state.

Victims located in the state of South Dakota saw the most severe impact from cryptocurrency crimes last year, suffering an average loss of $998,000 per victim, 10 times more than the national average.

That was followed closely by those living in New Hampshire at $147,000 per victim, Georgia with $138,000 per victim, Delaware with $121,000 per victim, and California with $117,000 per victim.

While the Golden State came in at fifth place in terms of average losses per victim, it also had the highest number of crypto-scam victims—accounting for 4,879 individuals, or 18 percent of the nation’s total, given its huge population.

It also had the highest total losses—$572.6 million—suggesting that Californians are most at risk of falling victim to such scams.

In contrast, the states of Mississippi ($14,884 per victim), Alaska ($20,305 per victim), and Arkansas ($27,670) were the least impacted by crypt-related scams, according to the study.

“Criminals prefer cryptocurrencies not only because of their relative anonymity,” Aleksandr Valentij, chief information security officer at Surfshark, told the American Banker.

“If the victim realizes they’ve been scammed, crypto transfers cannot be reversed like bank transfers, and the money is lost forever, especially if it goes through a cryptocurrency tumbler or is ‘washed’ in any other way,” Valentij continued. “This is particularly convenient for scammers, and combined with the inflated interest in crypto we have at the moment, it creates a perfect environment for crypto scams.”