California warns of $6.5M crypto scams and seven new fraud types

The California Department of Financial Protection and Innovation (DFPI) has identified seven new types of cryptocurrency and AI-related scams, highlighting the growing sophistication of fraudsters.

In 2024, the DFPI received 2,668 complaints, including reports of fake Bitcoin (CRYPTO:BTC) mining schemes, fraudulent crypto gaming platforms, and deceptive job offers requiring victims to transfer cryptocurrency and share private information.

Other scams include theft of private keys through fake airdrops, investment group fraud on WhatsApp or Telegram, and AI-powered schemes promising unusually high returns.

DFPI Commissioner KC Mohseni urged caution when engaging with unknown platforms, advising users to verify website domains and remain alert to recovery scam sites.

The DFPI also reported shutting down 26 fraudulent crypto websites last year, uncovering $4.6 million in user losses.

These sites often lured victims with promises of high returns and lacked contact information or listings on legitimate platforms like CoinMarketCap.

Separately, the California Department of Justice (DOJ) dismantled 42 fake cryptocurrency websites in 2024 that collectively stole $6.5 million from victims, with an average loss per person exceeding $146,000.

Attorney General Rob Bonta acknowledged the challenges of prosecuting international scammers but emphasised ongoing efforts to mitigate their impact by targeting fraudulent websites.

Among the most damaging scams are “pig-butchering” schemes, where fraudsters use social engineering tactics to build trust with victims before stealing their assets.

These scams accounted for a significant portion of the complaints received by DFPI.

To combat these threats, DFPI launched a Crypto Scam Tracker in February 2024—a searchable database based on user complaints designed to help Californians identify potential risks.

The tracker is continuously updated as new scams emerge.

The rise in crimeware-as-a-service (CaaS), where experienced hackers sell tools to less skilled offenders, further underscores the need for vigilance.

As the AI industry grows—reaching a market cap of $638 billion in 2024—the intersection of AI and crypto fraud poses increasing risks for consumers and investors alike.