The Consumer Financial Protection Bureau called attention to the prevalence of crypto-related criminal activity in a recent complaint bulletin.
According to the CFPB, it received more than 8,300 crypto-related complaints from October 2018 to September 2022, with a majority of those in the last two years. Of those complaints, approximately 40 percent said they had fallen victim to scams. “Various transactional issues” accounted for 25 percent, and issues with assets being unavailable when promised constituted approximately 16 percent.
According to the CFPB, many had problems accessing their crypto funds “due to outright platform failures, identity verification issues, security holds, or because of technical issues with platforms.”
The CFPB listed several other themes in crypto-related complaints, including:
- “Pig butchering schemes” which convince victims to place money into fraudulent crypto trading platforms.
- Romance scams, which include criminals “gaining the victim’s confidence, trust and romantic affection in order to get victims to set up crypto-asset accounts, only for the scammers to ultimately steal all their crypto-assets.”
- Problems receiving restitution. “In situations where consumers have been defrauded, or had their account hacked, they are often told there is nowhere to turn to help,” the CFPB stated. “In addition, crypto-asset platforms and service providers tend to require mandatory arbitration and limit class action suits in order to use their service.”
- Criminals taking advantage of a lack of in-house identity verification to prevent money laundering and fraud.
- Criminals linking transactions and the crypto address with the identity of a consumer or their other transactions.
- Extreme fluctuations in the value of cryptocurrencies compared to stable, government-backed currencies as evidenced by the recent implosion of FTX and rapid drop in value of the broader crypto market.
“Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra. “Americans are also reporting transaction problems, frozen accounts, and lost savings when it comes to crypto-assets. People should be wary of anyone seeking upfront payment in crypto-assets, since this may be a scam. We will continue our work to keep the payments system safe from fraudsters targeting Americans.”