California financial regulator warns of 7 new types of crypto, AI scams

2024 has seen an alarming increase in reports of cryptocurrency and artificial intelligence scams, as highlighted by the California Department of Financial Protection and Innovation (DFPI). A recent statement from the DFPI revealed that users lodged 2,668 complaints, uncovering seven novel types of scams previously uncharted in their records.

Among the most concerning scams are deceptive Bitcoin mining schemes, where victims are lured into investing in non-existent mining operations. Additionally, reports highlight fake crypto gaming schemes, which encourage users to deposit funds, only to have their wallets drained immediately. Other reported malpractices include fraudulent job offerings requiring victims to transfer cryptocurrency and share private information.

Victims have also encountered theft of private keys through fake airdrop offerings, and examples of investment scams proliferating on platforms like WhatsApp and Telegram. AI investment schemes promising unrealistic returns have emerged, duping users who engage with fraudulent websites. The rapid expansion of the AI industry, which reached a market cap of $638 billion in 2024, has only intensified these challenges, according to research from Precedence Research. As the AI sector grows, it increasingly attracts scammers looking to exploit the hype.

Moreover, the emergence of crimeware-as-a-service (CaaS) has underscored the evolving tactics of cybercriminals. This business model allows seasoned hackers to sell their tools and services to less experienced individuals, broadening the reach of cybercrimes.

In response to the growing threat landscape, DFPI Commissioner KC Mohseni has emphasized the importance of caution when engaging with unfamiliar platforms. He advises potential victims to validate website authenticity to prevent falling for illicit clones and warns against engaging with suspected crypto recovery scams.

The DFPI has made notable strides, collaborating with state authorities to dismantle over 26 fraudulent crypto websites, uncovering $4.6 million in losses for users in the previous year alone.

California DOJ Combatting Crypto Scams

California’s Department of Justice (DOJ) has taken action against the increasing prevalence of cryptocurrency scams. In 2024, the DOJ successfully shut down 42 scam websites, reclaiming approximately $6.5 million misappropriated from victims, leading to an average individual loss of $146,306.

In a statement, California Attorney General Rob Bonta noted the challenges of prosecuting these scams due to their often international nature. Many of these scam websites promised unreasonable returns, lacked contact information, and made enticing offers for signing up—while notably missing listings on recognized crypto platforms such as CoinMarketCap.

A study from on-chain security firm Cyvers has characterized pig butchering schemes as particularly devastating, estimating industry losses at over $5.5 billion from 200,000 identified cases throughout 2024. Phishing attacks have also been prominently flagged; with the blockchain security firm CertiK reporting that such attacks cost users approximately $1 billion in losses across 296 incidents, cementing them as a primary security threat of the year.

With the crypto landscape continually evolving, both the DFPI and the California DOJ emphasize the need for ongoing vigilance and education to safeguard users against emerging scams in this dynamic environment.