California Authorities Combat Crypto Fraud

California authorities increased efforts against crypto fraud in 2024 by shutting down 26 fraudulent websites, revealing over $4.6 million in consumer losses.

In a statement on Monday, the California Department of Financial Protection and Innovation (DFPI) reported identifying seven new types of scams using their “Crypto Scam Tracker.”

The tracker analyzed over 2,600 complaints, uncovering various frauds such as fake Bitcoin mining and crypto job scams, as well as misleading AI investment schemes.

DFPI Commissioner KC Mohseni emphasized the importance of the tracker, saying it empowers consumers to remain vigilant as crypto scams evolve.

Additionally, the California Department of Justice (DOJ) reported dismantling 42 scam websites run by international fraudsters and exposed $6.5 million in losses stemming from promises of high returns.

The rise of “pig-butchering” scams, where fraudsters cultivate false relationships with victims via social media or dating apps to manipulate investments in fictitious cryptocurrency projects, has contributed to this increase in fraud.

Victims attempting to withdraw funds are often left with empty pockets. California Attorney General Rob Bonta noted that scammers exploit emotional manipulation to take advantage of individuals seeking connections.

Blockchain analysis firm Chainalysis revealed a nearly 40% surge in pig-butchering scam revenue compared to 2023, with a staggering 210% increase in victim deposits. This type of fraud represents a significant portion of the $9.9 billion in total scam-related crypto losses documented by Chainalysis in 2024.

Elad Fouks, head of fraud products at Chainalysis, indicated that generative AI has the potential to enhance crypto fraud, creating convincing fake content like websites and listings for scams, making them harder to detect.

Edited by Stacy Elliott.