Report: Most fraud complaints involve crypto

Most fraud-related complaints involve fraudulent crypto investments initiated through social media contacts that later develop into relationship confidence scams, according to the Securities and Exchange Commission.

Background: The SEC Office of the Investor Advocate’s 2024 report on activities notes: “The exceptional scope and staggering financial impact of the current fraud crisis has been the subject of many alarming law enforcement reports and alerts.” It urges Congress, financial regulators, and law enforcement agencies to coordinate efforts with the SEC to combat this criminal activity.

Details:

• The SEC Ombuds Office said it continues to receive an increasing volume of complaints alleging fraud and other securities law violations, noting that such submissions increased by 28% from 2022 to 2023, and by 41% from 2023 to 2024, with most of the complaints involving crypto investments in some manner.

• The Office of Investor Education and Advocacy within the SEC reported a similar increase in the number of complaints related to crypto-related investments: It received 1,075 in fiscal 2020, 4,599 in fiscal 2021, 5,040 in fiscal 2022, and 5,357 in fiscal 2023.

More: The FBI’s Internet Crime Complaint Center recently reported that it received more than 69,000 complaints from the public regarding financial fraud involving the use of cryptocurrency last year. The estimated losses exceeded $5.6 billion, accounting for nearly 50% of all losses.

ICBA Resources: ICBA blog posts spotlight the growth of the pig-butchering scam, in which fraudsters use cryptocurrencies to defraud victims, and the need for a policy response.