California Launches Crypto Scam Tracker to Protect Investors

On February 16, 2023, the Department of Financial Protection and Innovation (DFPI) in California introduced a new tool aimed at helping residents identify and avoid crypto scams. The crypto scam tracker tool is a searchable database that compiles complaints about fraudulent schemes, allowing investors to search for specific companies, scam types, or keywords to uncover existing complaints and gain insights into others’ experiences with similar offers. This tool is regularly updated with new scam reports and includes a glossary to explain commonly used crypto terms, equipping users with the knowledge required to identify scams and protect themselves.

The tracker tool has compiled information from public complaints and has not independently verified reported losses. As the DFPI receives complaints about new crypto scams, it updates the information on the tracker to keep investors informed. The tool encourages investors to report scams, contributing to the safety of the community. Anyone who has fallen victim to a crypto scam or fraud or becomes aware of a scam not yet listed on the scam tracker can inform the DFPI through an online complaint form or by contacting the department via toll-free phone. Companies that have been mistakenly included in the tracker can also contact the DFPI for assistance.

In 2024, the DFPI received over 2,668 complaints from investors in California and across the US. Based on these complaints, in partnership with the California Department of Justice, it shut down more than 26 different crypto scam websites and unraveled $4.6 million in consumer losses. The tracker tool is invaluable for identifying patterns in scammer behavior and helping investors avoid similar scams. It can be used for due diligence, analysis of messaging, and education and prevention. The glossary serves as an educational resource, outlining various terms used in crypto scams and helping users enhance their awareness and protect themselves from falling victim to fraudulent schemes.

The tracker compiles scams reported directly by consumers, detailing descriptions of losses to the complainants. Users can view the information shared with the DFPI by using the search function to explore complaints by company, scam type, or keywords. The tracker is segregated into five columns, comprising primary subject, complaint narrative, scam type, website, and screenshot. Users can change the order of the list, determine the number of entries they want to see at a time, and toggle between pages displaying the entries.

The crypto scam tracker exposes many fraudulent schemes plaguing the crypto space. Some examples of scams listed in the glossary section of the tracker tool include pig butchering scams, rug pull scams, crypto job scams, wallet drainer scams, fraudulent trading platforms, imposter scams, and Bitcoin mining scams. These scams use various tactics to deceive investors, such as building trust through social, romantic, or business interactions, creating fake websites, and using social engineering to steal digital assets.

Protecting crypto investors from these fraudulent practices requires a robust and multifaceted approach. Federal and state regulators are collaborating to educate investors about emerging scam patterns and compile a comprehensive defense against fraudsters. The Federal Trade Commission (FTC) protects consumers from scams and manages the National Do Not Call Registry. The Consumer Financial Protection Bureau (CFPB) plays an active role in regulating crypto assets, issuing fraud warnings, investigating companies, and reviewing consumer complaints. Several US states have also taken initiatives to combat scams, such as New York, Massachusetts, Texas, and Florida, which offer localized support and specialized tools to assist scam victims and guide them to avoid fraud.

The US follows a multi-layered approach to crypto scam prevention and consumer protection. Federal agencies provide nationwide oversight and resources regarding the crypto space, while state-level initiatives offer localized support and specialized tools. This collaborative effort, combining education with enforcement, underscores the importance of vigilance and proactive measures in dealing with the complex landscape of scams. However, due to the fragmented crypto crime reporting system in the US, industry leaders advocate for a unified platform that consolidates data and allows victims to track complaints. As more stakeholders push for standardized measures, such a platform could significantly improve transparency, support victims, and foster stronger accountability within the crypto space.