California Reports Surge In New Crypto And AI Scams

According to Cointelegraph, the California Department of Financial Protection and Innovation (DFPI) has identified seven new types of cryptocurrency and artificial intelligence scams reported by users in 2024. The DFPI received 2,668 complaints last year, highlighting scams such as fake Bitcoin mining schemes, where fraudsters lure victims with false investment opportunities. Additionally, the department noted reports of fraudulent crypto gaming schemes that drain users' wallets and fake job offers requiring victims to transfer cryptocurrency and disclose private information. Victims also reported losing private keys through deceptive airdrops, falling prey to fake investment groups on platforms like WhatsApp and Telegram, and encountering AI investment scams promising unusually high returns. The rapid growth of the AI industry, which reached a market cap of $638 billion in 2024, has coincided with a rise in crimeware-as-a-service (CaaS). This trend involves experienced hackers selling their tools and services to less experienced criminals. DFPI Commissioner KC Mohseni advises caution when engaging with unfamiliar platforms, urging users to verify website domains to avoid fraudulent imitations and to be wary of crypto recovery scam sites. In collaboration with the state, the DFPI successfully shut down over 26 fraudulent crypto websites, uncovering $4.6 million in user losses last year. Meanwhile, the California Department of Justice (DOJ) dismantled 42 crypto scam websites in 2024, which collectively stole $6.5 million from victims, with an average loss of $146,306 per person. The DOJ noted that international fraudsters often perpetrate these scams, making prosecution and arrest challenging. Common characteristics of these scam websites include promises of high returns, lack of contact information, offers of prizes for signing up, and absence from legitimate crypto industry listings like CoinMarketCap. A report by on-chain security firm Cyvers identified pig butchering schemes as one of the most costly scams in 2024, estimating losses of over $5.5 billion across 200,000 cases. Additionally, blockchain security firm CertiK's annual Web3 security report highlighted crypto phishing attacks as the most significant security threat of 2024, costing users $1 billion across 296 incidents. These findings underscore the importance of vigilance and caution in the rapidly evolving landscape of cryptocurrency and AI investments.