On February 16, the California Department of Financial Protection and Innovation (DFPI) announced its new Crypto Scam Tracker.
The tracker is built on a database containing the names of platforms and companies associated with cryptocurrency investment frauds, their websites, descriptions of the types of scams involved, and details of customer complaints. The tracker also includes information about the individuals or groups involved in the scams, including the names they may be using for their illicit activities.
The main objective of the Crypto Scam Tracker is to alert investors about deceptive and fraudulent activities of companies related to crypto investment. It also urges customers to submit their complaints and negative experiences of financial losses through crypto investments.
The tracker includes a glossary of terms used in the database, to help users find relevant information. Currently, the database contains 36 records. The DFPI has emphasized that the losses reported by the tool users have not been verified. The department is open to discussing any identification errors with individuals or companies who believe they have been wrongly reported.
Most widespread crypto frauds
DFPI warns investors about the popularity of imposter websites:
"Imposter websites are one of the most commonly reported scams. The companies or websites listed may sound similar to the names of other companies or websites that also operate in the marketplace. When companies or websites (fake or not) have look- or sound-alike names, the potential confusion created for consumers is real."
Attackers also often falsify their own identities, which is commonly known as spoofing. Spoofing and imposture are typically combined with phishing, a tactic that tricks victims into sharing sensitive information.
Pig butchering is another popular scam technique. Such attacks, based on building a trusting relationship with the victim before introducing fraudulent investment strategies, have become increasingly successful in stealing large sums of money. These scams often begin on social media networks, even though they are not limited to those platforms.
According to the information in the DFPI’s database, perpetrators often look for their victims on WhatsApp.
Other US initiatives to protect consumers against crypto scams
California is not the first state in the USA that has started its battle against crypto scammers.
The Bureau of Consumer Frauds & Protection operating in The New York state investigates cases of crypto fraud:
"The Bureau of Consumer Frauds and Protection, part of the Economic Justice Division, prosecutes businesses and individuals engaged in fraudulent, misleading, deceptive, or illegal trade practices. In addition to litigating, the Bureau mediates thousands of complaints each year from individual consumers."
Similarly, the Consumer Protection Division of the Florida Attorney General’s Office is dedicated to investigating different unlawful business practices including those associated with crypto scams. The division highlights phishing as a common scam affecting residents of Texas and strongly advises against sharing any personal information, including passwords and credit card numbers.
It advises to "make sure to carefully consider whether the link you have been sent is authentic. You may want to independently reach out to the business or agency on your own terms using a known phone or website instead of accepting the unsolicited contact. Most legitimate companies will not contact you this way asking for personal information."
Cryptocurrency fraud red flags
Florida's Consumer Protection Division has identified other common warning signs of scams, regardless of whether they involve cryptocurrency or traditional currency. Besides using fake identities when contacting potential victims, scammers typically lure their victims with promise unrealistically high returns on investments or free giveaways.
Many scams require upfront payments to receive something "for free."
When considering cryptocurrency investments, it is particularly important to carefully evaluate various aspects of the project offering the token. This includes examining the quality of the whitepaper, website, social media activity, and roadmap. Excessive hype without evidence of real achievements is another major red flag of a potential scam.