The FBI reported yesterday that cryptocurrency fraud in the US amounted to $5.6 billion in 2023. This is a 45% increase since 2022.¹ Nearly 40% of the fraud was perpetrated on people age 60 and over.
This all makes the United States the crypto fraud capital of the world by a very wide margin. Here are the country stats for the top losers:
Even after taking population into account, the US reported fraud losses more than 7x higher than the next biggest loser. When you figure that the positive value of crypto is approximately zero, this means the US sustains a net consumer welfare of -$5.6 billion just for allowing crypto to exist. Despite this, crypto stans continue to push for even looser regulation of what is, essentially, just a criminal enterprise.
Welcome to the free market.
¹By my calculations it's a 36% increase. But what's nine percentage points between friends?
How does this fraud work? Someone tries to buy some and it isn't delivered?
Is it institutions or people?
Yeah, I was curious how this is counted since I think the entire thing is just a fraud scheme.
https://www.britannica.com/money/cryptocurrency-scams
The gambling app market extracts more revenue from the US economy than crypto fraud.
I’m somewhat embarrassed to say I have no problem with people being scammed by crypto. Invest in a scam, get scammed.
well, by that logic anyone who gets scammed deserves to get scammed.
In crypto? Yes.
I could agree, except that over time if crypto gets more and more legitimized, mainstream investment vehicles (pension funds, banks, etc) will invest in crypto. Those mainstream vehicles are run by managers whose incentives differ from the actual investors (retirees, etc) and also are sometimes backstopped by public funds (e.g. FDIC insurance, pension insurance). So THEN when crypto scams happen, we'll all be on the hook for the cost.
Shorter: if crypto were walled-off from the real economy, completely walled-off, I wouldn't shed many tears either. But it's not walled-off: indeed, more and more it's getting to where people see it as legit, and esp. in the finance biz.
You should be embarrassed to say that. The typical victim is older, which means quite a few are no longer cognitively with it.
Plus, a lot of these scams take everything. This isn't some guy scamming a retiree out of a couple grand to clean gutters and then not doing it. This is someone stealing an entire life's savings. That just means they are guaranteed to end up on Medicaid.
So, which countries net gain from crypto fraud?
Yes, unreported in this chart is in which countries the beneficiaries of the scams reside.
This almost definitely is just people scamming on their taxes. Most other countries don't allow you to deduct investment losses or "losses" from your income before it is taxed - or they don't allow crypto to be counted as an "investment" in the first place - so there's less incentive in those countries for individuals to report losses or "losses" on crypto like there is in the good ol' US.