DETROIT – New statistics from the FBI revealed that Michiganders lost $79,894,360 in cryptocurrency scams last year.

The agency compiled and analyzed data from all reported cryptocurrency complaints in 2023 — more than 69,000 complaints. While the amount of cryptocurrency fraud reported represented about 10% of the total number of financial fraud complaints, cryptocurrency fraud accounted for roughly half of all losses last year.

More than $5.6 billion was lost nationally due to cryptocurrency scams in 2023, a 45% increase from 2022 and more than double the number reported in 2021.

Authorities believe those numbers could actually be higher due to a lack of reporting.

The full report from the FBI can be read at the bottom of the page.

The data showed that Michigan was ranked No. 16 nationally for the number of cryptocurrency complaints with 1,319 and ranked No. 17 for monetary losses with $79,894,360.

The average monetary loss per complaint in Michigan was more than $60,000.

The top three states for the number of complaints and financial losses were California, Texas and Florida, which reported a collective $2 billion in losses in 2023.

Top cryptocurrency scam

More than half of the national cryptocurrency complaints from 2023 stemmed from investment fraud, which resulted in nearly $4 billion in losses.

According to authorities, criminals would use social engineering tactics to build trust with victims via dating apps, social media, professional networking sites or encrypted messaging platforms. Once trust was established, the criminals introduced fraudulent cryptocurrency investment opportunities, directing victims to fake investment websites or apps.

Victims were shown fake profits and allowed to withdraw small amounts initially to build further trust, but when they attempted to withdraw larger sums, they were asked to pay fees or taxes.

The criminals never release the funds, even if their targets pay the imposed fees or taxes.

Victims are sometimes targeted again by scammers who claim to be able to help recover the lost funds, resulting in further monetary loss.

More information on how to avoid cryptocurrency investment fraud can be found here.

Why is cryptocurrency used for scams and fraud?

The report details that criminals like to use cryptocurrency due to its decentralized nature, which eliminates the need for financial intermediaries and allows for secure, rapid and irrevocable transactions. They can happen anywhere with the use of a private key and an internet connection.

While these transactions are permanently recorded on public blockchains, tracking becomes challenging when cryptocurrency moves to exchanges overseas — especially in jurisdictions with weak anti-money laundering regulations.