The thousands of investors had different goals for growing their money last year, from paying for cancer treatments to helping loved ones, to just making a good return.
But all had one thing in common: they were victims of cryptocurrency scams that totaled an estimated $5 billion in potential losses.
On Thursday, the FBI described the harm cryptocurrency investment schemes have caused across the nation in recent years — and the proactive steps the agency is taking to identify victims and combat the crime.
Through Operation Level Up, the FBI is using social media and publicly available information about crypto transactions to find people who are actively being defrauded and intervene, Deputy Assistant Director James Barnacle said during a news conference with national media.
That intervention, Barnacle said, is done through a phone call.
Supervisory Special Agent Julia MacBeth said those initial conversations with the victims can be delicate.
“We’re essentially calling these victim who are in the middle of the scams and are unaware of what’s going on and then trying to disrupt everything that they believe is true,” she said.
The specially trained FBI and Secret Service agents explain what should be the victims’ next steps to protect themselves and advise them how to file a report with law enforcement.
“If needed, we provide mental health and other resources to assist victims with the fallout from these crimes,” Barnacle said.
The FBI will not ask the person for money or any personal information, he continued.
“We will not ask to safekeep your money for you,” he said. “What we will do is try to convince you to save your hard-earned money and not send it to overseas criminals.
“If an agent calls you, they will give you a method to verify that they’re an agent with the federal government.”
False promises
In the last year, Barnacle said, the FBI has notified more than 4,300 victims in all 50 states and multiple countries.
The agency did not have a state-by-state breakdown of victims from 2024.
In 2023, before Operation Level Up began, there were 1,176 victims of fraud involving cryptocurrency in Pennsylvania, according to the FBI’s Internet Crime Complaint Center.
Those victims lost nearly $97 million.
Nationally, the center received 69,468 complaints tied to cryptocurrency.
Barnacle said that of all identified victims who were notified, three-quarters were not aware that they were actively being scammed.
“These types of scams lure in victims with a promise of extraordinary return on investments,” Barnacle said.
The scammer shows the victim what appear to be legitimate platforms and terrific investment results.
“What they’re seeing is a dummy account,” he said. “It’s a shadow account. It’s fictitious, and when victims try to withdraw their money, they are denied or only allowed to make a small withdrawal.
“The reality is the victim’s money is gone.”
Barnacle estimated that the FBI has saved victims more than $285 million so far.
Tech-savvy victims
To identify victims, he said that the FBI works with the private sector, including virtual asset service providers and social media companies, as well as reviewing the block chain public ledger, a digital system that records crypto transactions.
“We look at wallets that are out there, and we engage with virtual asset service providers and other members of the private sector to identify where fraud proceeds are going and kind of work it backwards, and we identify victims that way and call,” Barnacle said.
When victims are targeted, he continued, they are asked by the scammer to open an account either with a virtual service provider or to do so at a cryptocurrency kiosk. Then, they’re given a wallet address to send the money, which is controlled by the criminal.
There is an original purchase of cryptocurrency, Barnacle said, “but the money is quickly moved.”
It is stolen and then moved to a dummy account.
Most of the victims in these scams are tech savvy, Barnacle said. The average age is between 30 and 60, and the victims are actively looking for investment opportunities.
“They’re sophisticated, and they’re still getting conned.”
Proactive approach
In some instances, the scammers advertise on social media for cryptocurrency investment opportunities.
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Victims then receive a sales pitch and are lured in, Barnacle said.
Payments can also be made through wire transfers and, in some instances, there have been pick-ups of cash or gold bars at victims’ homes.
“In numerous instances, victims told the FBI our efforts in Operation Level Up stopped them from liquidating their entire retirement accounts or selling their homes or taking out costly loans to continue investing in fake cryptocurrency applications,” Barnacle said.
“Some victims reported they were investing to help pay for their cancer treatments or trying to help financially support the dependent family members in need.”
In dozens of cases, he said, those targeted were referred to the FBI’s victim services division.
“Typically, the FBI takes a reactive stature towards these types of crimes, but this is the first proactive measure that we’re taking to get in front of victims before they lose more money,” MacBeth said
There is a second part of the operation in which the FBI attempts to recover the stolen money through its virtual assets unit, which has 123 members across the agency’s field offices who are experts in cryptocurrency.
“They’ll support the Level Up initiative by tracing cryptocurrency and doing freeze and ultimately seizure orders,” Barnacle said. “But the amount of money we’re freezing, seizing is very, very small in comparison to the dollar figures that are lost.”
The FBI’s operation has nothing to do with the virtues or drawbacks of cryptocurrency, Barnacle said.
“We’re not commenting on the validity of cryptocurrency at all,” Barnacle said. “What we’re talking about is fraudsters lying to people and taking their money. They’re scammers. There is no cryptocurrency in these schemes.”