A recent warning from California’s Department of Financial Protection and Innovation (DFPI) highlights the alarming rise of seven new types of cryptocurrency and artificial intelligence (AI) scams. In 2024 alone, the DFPI received a staggering 2,668 complaints related to these deceitful schemes. Users reported scams ranging from fictitious Bitcoin mining operations to fraudulent job offers requiring cryptocurrency transfers and personal information.
The DFPI’s investigation revealed several newly identified scams that had not been previously documented. Among these, fake Bitcoin (BTC) mining schemes promise unrealistic returns on investments, enticing victims to lose significant amounts of money. Users also faced fake crypto gaming schemes, where individuals deposited funds only to have their wallets completely drained. Moreover, scams have emerged offering fake jobs that ask for cryptocurrency transfers and sensitive data.
The growth of the AI sector, which reached an impressive $638 billion market cap in 2024, has unfortunately paralleled the rise in these scams. Cybercriminals have capitalized on the AI boom, introducing AI investment scams that lure victims with promises of unreasonably high returns. The DFPI’s Commissioner, KC Mohseni, cautions consumers to exercise extreme caution when engaging with unknown platforms. Among his advice includes verifying website domains to avoid falling victim to fraudulent imitations and staying vigilant against crypto recovery scam sites.
The alarm has also been sounded by California’s Department of Justice (DOJ), which reported taking down an alarming 42 fraudulent crypto scam websites throughout 2024, which collectively swindled users out of approximately $6.5 million. This averages out to losses of around $146,306 per person. Common features among these websites included enticing promises of high returns, a lack of legitimate contact information, and enticing promotions for signing up without any credible listings on recognized crypto platforms like CoinMarketCap.
With the rise in scams, the financial community is urged to remain vigilant. A report revealed that exploits and scams like pig butchering schemes are estimated to have cost the industry over $5.5 billion in 2024 alone. In response to these challenges, various blockchain security firms indicate that phishing attacks have also become significant threats, amounting to losses of approximately $1 billion across numerous incidents this past year.
In summary, the warning from California’s regulators underscores an urgent need for education and caution in the ever-evolving landscape of cryptocurrencies and AI-driven opportunities. As fraudsters continue to develop increasingly sophisticated schemes, consumers must be proactive in safeguarding their assets against potential threats.
