California Regulator Warns of 2024 Crypto Scams, 2,668 Complaints

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 cryptocurrency and provide sensitive personal 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 cryptocurrency after interacting with sham websites designed to mimic legitimate platforms. 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 successfully 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 played a significant role by taking down 42 crypto scam websites in 2024, which had stolen $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 characteristics of these scam websites included promises of high returns, lack of contact information, offers of prizes for signing up, and no listings on legitimate crypto industry websites.

The rise in these scams underscores the need for increased regulatory oversight and enforcement. The DFPI's warning highlights the importance of vigilance and education in recognizing and avoiding these sophisticated fraudulent activities. Consumers are advised to be cautious of unsolicited investment offers, especially those promising high returns with little risk. Verifying the legitimacy of any investment opportunity through independent research and consulting with financial advisors is crucial. Additionally, using secure platforms for transactions, being cautious of online interactions, and reporting any suspicious activity to the relevant authorities are essential steps in protecting oneself from these emerging threats.