The past year has seen a sharp rise in reports of new scams targeting users in the cryptocurrency and artificial intelligence sectors, according to the California Department of Financial Protection and Innovation (DFPI). As highlighted in a March 10 statement, the department received 2,668 complaints in 2024, uncovering seven novel types of scams that had not been documented before.
Among the reported scams, fraudulent Bitcoin mining schemes stood out, wherein individuals were enticed to invest in non-existent mining operations. Similar concerns arose surrounding fake crypto gaming platforms that lured users to deposit funds, only for their wallets to be drained shortly thereafter. Furthermore, scammers have begun to offer fictitious job opportunities, requiring deceptive crypto transfers and personal information from victims.
Source: California Department of Financial Protection and Innovation
Additional methods of deception include fake airdrops aimed at stealing private keys, fraudulent investment groups promoting schemes via messaging apps like WhatsApp and Telegram, and high-yield AI investment scams that have begun to emerge. Moreover, users have reported significant financial losses after interacting with fraudulent websites masquerading as legitimate investment platforms.
The surge in AI technology growth in 2024, reaching a market cap of $638 billion, has become a double-edged sword, as it enhances both opportunities and risks within the sector. Notably, the rise of crimeware-as-a-service (CaaS) has permitted skilled cybercriminals to sell their tools, fostering a new wave of beginner fraudsters.
DFPI Commissioner KC Mohseni has urged consumers to exercise caution when engaging with unknown platforms. Key strategies for protecting oneself include verifying website domains to avoid imitation sites and remaining vigilant against crypto recovery scams.
California DOJ Takes Action Against Scams
In another significant initiative, California’s Department of Justice (DOJ) successfully shut down 42 fraudulent crypto websites in 2024, halting scams that defrauded victims of approximately $6.5 million, with losses averaging $146,306 per individual. The DOJ emphasized the complexities surrounding prosecution and arrest when scams are perpetrated by international criminals.
Typical characteristics of the scam websites included unrealistic promises of high returns, absence of contact information, enticing signing bonuses, and a lack of listings on reputable crypto sites such as CoinMarketCap.
In a separate report by the on-chain security firm Cyvers, so-called “pig butchering” schemes were identified as significant threats, with estimates suggesting they cost the industry over $5.5 billion in 2024 across 200,000 cases. Additionally, blockchain security firm CertiK identified phishing attacks as the most considerable threat in its annual Web3 security report, accounting for over $1 billion in losses across nearly 300 incidents.
As the crypto landscape continues to evolve, it remains crucial for users to stay informed about emerging threats and adopt vigilant practices to safeguard their assets.
