California Regulator Identifies New Crypto and AI Scams

YEREVAN (CoinChapter.com) — California’s financial watchdog identified seven new types of crypto scams and AI scams in 2024. The California regulator, officially named the Department of Financial Protection and Innovation (DFPI), received 2,668 complaints related to financial fraud.

The DFPI’s March 10 statement highlighted scams involving fake Bitcoin mining schemes. Fraudsters tricked people into investing in non-existent Bitcoin mining operations. Victims believed their investments would generate profits but instead lost their money.

Additionally, the DFPI reported new types of crypto gaming scams. Scammers convinced users to deposit crypto assets into gaming platforms. Once deposited, fraudsters quickly drained users’ wallets.

Fake Jobs and Private Keys Theft on the Rise

The regulator received multiple reports about fake job offers. These fraudulent positions required applicants to transfer crypto assets or provide sensitive personal information. Many victims complied, resulting in significant financial losses.

Another scam reported involved the theft of private keys through fake crypto airdrops. Victims interacted with fake promotions promising free crypto tokens. Instead of receiving tokens, scammers accessed and stole crypto directly from users’ wallets.

Fraudsters also created fake investment groups on messaging apps like WhatsApp and Telegram. Users joined these groups, believing they were genuine, and invested crypto funds. Scammers then disappeared with the invested assets.

AI Investment Scams Gained Popularity in 2024

Scammers increasingly used artificial intelligence as a cover for fraud. Victims invested crypto into fake AI-driven platforms promising high returns. According to the report, people lost their crypto after engaging with these deceptive AI websites.

The AI sector’s overall growth matched this rise in related scams. A report by Precedence Research noted the AI market reached a valuation of $638 billion in 2024. This significant market size attracted fraudsters targeting investors interested in AI technology.

DFPI and California DOJ Shut Down Crypto Fraud Websites

In partnership with state authorities, the DFPI shut down more than 26 fraudulent crypto websites in 2024. These sites caused losses totaling around $4.6 million.

California’s Department of Justice (California DOJ) separately announced it took down 42 crypto scam websites in the same year. Victims of these sites collectively lost $6.5 million. The average loss per individual reached approximately $146,306.

California DOJ stated that scammers often operate internationally. This international aspect makes legal action against them complicated. Common features among scam sites included promises of high returns, no contact details, and fake signup incentives.

Security Firms: Crypto Fraud and AI Scams Remain Costly

Blockchain security firm CertiK released its annual report, naming crypto phishing attacks as a significant threat. In 2024, these attacks cost victims around $1 billion across 296 incidents.

Another blockchain firm, Cyvers, pointed out “pig butchering” schemes as especially damaging. These scams resulted in losses of over $5.5 billion, affecting about 200,000 people. Fraudsters using this method gradually gained trust before convincing victims to invest in fake opportunities.

Above all, California’s regulator and law enforcement continue to monitor and respond to ongoing crypto fraud and AI scams as the reports of incidents continues to grow with the prevalence of AI in the marketplace.