California Cracks Down on Crypto & AI Scams

California's Fight Against Crypto and AI Scams

The California Department of Financial Protection and Innovation (DFPI) and the California Department of Justice (DOJ) are intensifying their efforts to combat the rising tide of cryptocurrency and artificial intelligence (AI) scams. In 2024 alone, authorities reported a significant increase in fraudulent activities, uncovering seven previously unseen scam types.

New Scam Tactics Unveiled

The DFPI received 2,668 complaints in 2024, revealing sophisticated scams targeting unsuspecting investors. These included:

• Fake Bitcoin mining schemes
• Fake crypto gaming schemes leading to wallet drainage
• Fraudulent job offers demanding crypto transfers and personal information
• Private key theft through fake airdrops
• Fake investment groups operating on WhatsApp and Telegram
• AI investment scams promising unrealistically high returns
• Scams involving deceptive websites

These findings highlight the evolving tactics used by cybercriminals to exploit the growing crypto and AI markets.

Impact and Regulatory Response

The DFPI, in partnership with the California DOJ, shut down over 26 fraudulent crypto websites and recovered $4.6 million in user losses. The DOJ independently took down 42 additional websites, recouping $6.5 million, with an average loss per victim of $146,306.

Commissioner KC Mohseni of the DFPI urges caution, advising users to verify website domains and avoid suspicious platforms. The rise of crimeware-as-a-service (CaaS), where hacking tools are sold to less experienced criminals, further exacerbates the issue.

The Broader Crypto Security Landscape

Independent reports highlight the significant financial losses caused by crypto scams in 2024. Pig butchering scams alone cost the industry an estimated $5.5 billion, while phishing attacks resulted in $1 billion in losses.

Protecting Yourself

With the ever-evolving landscape of cryptocurrency and AI-related scams, it is crucial to practice due diligence. At Codeum, we offer a comprehensive suite of blockchain security solutions to help mitigate these risks. Our services include:

• Smart contract audits
• KYC verification
• Custom smart contract and DApp development
• Tokenomics and security consultation
• Partnerships with launchpads and crypto agencies

By partnering with Codeum, you can secure your project and protect your investment against emerging threats.