California Regulator Warns of 2024 Crypto, AI Scams, $11.1M Lost

California's financial regulator has issued a stern warning about seven new types of cryptocurrency and artificial intelligence (AI) scams that have emerged in 2024. The California Department of Financial Protection and Innovation (DFPI) received 2,668 complaints this year, revealing scams that were previously unrecorded. These include fake Bitcoin mining schemes, where fraudsters entice victims with false investment opportunities in mining operations. Additionally, fake crypto gaming schemes lure users into depositing funds, only to have their wallets drained, and fraudulent job offers that require victims to transfer crypto and share private information.

Victims also reported the theft of private keys through fake airdrops, scams involving fake investment groups on messaging platforms like WhatsApp or Telegram, and AI investment scams promising unusually high returns. Furthermore, users lost their crypto after interacting with certain sham websites. The DFPI Commissioner KC Mohseni urged caution when interacting with unknown platforms, advising users to verify website domains to avoid fraudulent imitations and to be wary of crypto recovery scam sites.

Through its partnership with the State, the DFPI shut down more than 26 fraudulent crypto websites and uncovered $4.6 million in user losses last year. The California Department of Justice (DOJ) also took down 42 crypto scam websites in 2024 that stole $6.5 million from victims, with an average loss per person of $146,306. The DOJ noted that international fraudsters often carry out these scams, making them difficult to prosecute and arrest. Common threads among the scam websites included promises of high returns, no contact information, offers of prizes for signing up, and no listings on legitimate crypto industry websites.

The regulator's warning highlights the increasing sophistication and variety of fraudulent activities in the digital asset space. These scams often exploit the trust and enthusiasm of investors, particularly those new to the world of cryptocurrencies and AI technologies. The use of AI to create highly convincing and personalized scams is a growing concern, as it can analyze vast amounts of data to tailor scams to individual victims, making them more likely to fall for the deception. The regulator advised consumers to be wary of unsolicited investment offers, especially those that promise high returns with little risk. Additionally, the regulator recommended that individuals verify the legitimacy of any investment opportunity through independent research and by consulting with financial