The California Department of Financial Protection and Innovation (DFPI) has alerted the public to a wave of novel cryptocurrency and artificial intelligence scams, as reported through thousands of complaints in 2024.
In a March 10 statement, the DFPI disclosed that it had received 2,668 complaints this year and identified seven previously unreported scam types. Examples include fraudulent Bitcoin (BTC) mining schemes, where criminals offer phony investment opportunities in mining operations. The DFPI has also received complaints about fake crypto gaming schemes designed to drain users’ wallets and deceptive job offers that demand victims transfer cryptocurrency and divulge personal details.
Victims have reported the theft of private keys through counterfeit airdrops, fraudulent investment groups operating on platforms like WhatsApp and Telegram, and AI investment scams promising abnormally high returns. These scams can lead to significant losses when users interact with malicious websites.
The growth of the AI industry, which reached a market capitalization of $638 billion in 2024 according to Precedence Research, has coincided with a rise in crimeware-as-a-service (CaaS). CaaS involves experienced hackers and cybercriminals selling their tools and services to less experienced offenders for a fee and makes it easier for criminals to carry out scams.
DFPI Commissioner KC Mohseni is urging caution when dealing with unfamiliar platforms. He suggests individuals “verify website domains to avoid fraudulent imitations and stay wary of crypto recovery scam sites.”
Through a partnership with the State, the DFPI reports that they shut down over 26 fraudulent crypto websites last year and uncovered user losses totaling $4.6 million. The California Department of Justice (DOJ) also took action, closing down 42 crypto scam websites in 2024 that defrauded victims of $6.5 million, with an average loss of $146,306 per person.
The California DOJ, in its March 10 statement, acknowledged the difficulty in prosecuting international fraudsters. Common red flags among these scam websites include unrealistic return promises, missing contact information, sign-up incentive offers, and a lack of listing on reputable crypto industry platforms like CoinMarketCap.
On-chain security firm Cyvers flagged pig butchering schemes as particularly costly, estimating losses of over $5.5 billion across 200,000 identified cases. Meanwhile, blockchain security firm CertiK’s annual Web3 security report noted that crypto phishing attacks, which resulted in $1 billion in losses across 296 incidents, represented a major security threat in 2024.
