Crypto Scams Cost Americans $5.6 Billion in 2024

Crypto scams in the U.S. have reached alarming levels. According to the FBI, losses soared to $5.6 billion in 2024, marking a 45% increase from the previous year. Older adults, especially those over 65, were the hardest hit, losing more than $1.6 billion. California was the hardest-hit state, with $1.1 billion lost to crypto scams.

Though crypto-related crimes made up just 10% of all financial fraud complaints, they accounted for nearly half of the financial losses reported in 2023. This is largely due to the unregulated nature of cryptocurrency, which makes it easier for scammers to deceive people. Once a crypto transaction is completed, it cannot be reversed.

Why Are Crypto Investors at Risk?

Crypto investing is inherently risky due to its volatile nature and the promise of quick returns. Unfortunately, this combination makes investors particularly vulnerable to scams. Research shows that 80% of investors act under pressure, often without performing due diligence. This creates the perfect environment for scammers to take advantage of them.

In addition, many investors seek advice from unreliable sources. Research from InvestiFi reveals:

• 35% of investors turn to online searches for advice.
• 25% do not use any financial resources.
• 40% of young investors (18-25) rely on financial influencers.
• 50% of older adults (55+) lack any formal financial education.

Without proper financial knowledge, investors are more likely to trust fake experts, putting them at a higher risk of falling victim to scams.

The Role of Financial Institutions in Protecting Investors

Many people cannot afford traditional financial advisors, as many require a minimum investment of $25,000. As a result, many turn to apps and social media influencers, most of whom are not qualified to give sound financial advice.

Financial institutions have an important opportunity to protect investors by providing access to financial education and guidance. Here’s how they can help:

• Educational Content: Offer easy-to-understand resources like blogs, videos, and webinars on crypto risks.
• Personalized Financial Advice: Provide robo-advisors or in-house experts to help guide investors.
• Low-Barrier Investment Tools: Create investment options that help beginners get started with confidence.

By offering these tools, financial institutions can become trusted resources, making it easier for investors to avoid scams.

Bridging the Knowledge Gap for Safer Investments

Crypto scams are likely to continue evolving, so it’s important to take action now. Financial institutions that proactively address these risks by offering educational resources and secure investment tools can help safeguard their customers’ money. By focusing on financial literacy, these institutions can help investors make better decisions and protect their hard-earned savings from fraud.