Spot crypto scams early: California’s new tracker tool, explained

How to use California’s crypto scam tracker tool

California’s scam tracker tool is invaluable for identifying patterns in scammer behavior and helping investors avoid similar scams. Additionally, it encourages investors to report scams, contributing to the safety of the community.

The tracker can be broadly used in three ways:

• For due diligence: You can search for specific companies or websites using the tool to uncover existing complaints. This feature helps you gain insights into others’ experiences with similar offers, allowing for a preliminary risk assessment. However, it’s important to note that the absence of complaints doesn’t guarantee legitimacy, as scam sites often rebrand or operate under different names.
• For analysis of messaging: The scam tracker enables you to analyze suspicious messaging by searching relevant keywords. You could use terms like “lending” or “insurance” to discover patterns and similarities between the offers you have received and past complaints. This comparative approach helps you identify potential red flags and recognize the tactics of the scamsters.
• For education and prevention: The tracker’s glossary serves as an educational resource, outlining various terms used in crypto scams. By familiarizing yourself with these tactics, you can significantly enhance your awareness and protect yourself from falling victim to fraudulent schemes. This proactive approach to education is essential in navigating the complex and often risky cryptocurrency market.

Did you know? The Federal Bureau of Investigation’s (FBI) 2023 Cryptocurrency Fraud Report shows California faced the highest crypto-related losses in the US, reaching $1.15 billion. Within the FBI San Francisco Field Office’s jurisdiction, losses totaled $260,313,902, affecting 1,226 victims across 15 counties, including Alameda, San Francisco and Santa Clara.

How does California’s scam crypto tracker tool work?

The tracker compiles scams reported directly by consumers. The entries detail descriptions of losses to the complainants. To view the information shared with the DFPI, you may use the search function to explore complaints by company, scam type or keywords.

For instance, if you search using the keyword “trading platforms,” the tracker lists scams associated with the keyword. The tracker is segregated into five columns, comprising primary subject, complaint narrative, scam type, website and screenshot.

To change the order of the list, you can click the arrow beside the column header. 

You can also determine the number of entries you want to see at the time. To select the number of entries on a page, click the dropdown box at the bottom of the list and select your chosen number.

To toggle between the pages displaying the entries, you can use the buttons “Previous” and “Next.”

Fraudulent schemes listed by California’s crypto scam tracker tool

The crypto scam tracker exposes many fraudulent schemes plaguing the crypto space. From fake job offers to pig butchering scams, the tracker sheds light on the tactics used to deceive investors. 

Here are some examples of scams listed in the glossary section of the tracker tool. 

• Pig butchering scam: A pig butchering scam involves fraudsters building trust with you through social, romantic or business interactions before luring you into a fake investment scheme and persuading you to transfer funds to a fraudulent platform. These platforms might even display fake profits to encourage further deposits. Victims are denied withdrawal of funds on various pretexts, and scammers eventually disappear with the money. 

• Rug pull scams: These schemes involve developers who intentionally attract investors with false promises of high returns only to disappear with the money later. They often create a buzz on social media by roping in celebrities, which shoots up the cost of the tokens. Then the developers sell off their tokens to make big profits and crash the price, leaving investors with worthless tokens.

Did you know? A single X post by Argentine President Javier Milei, promoting the LIBRA token, caused its market capitalization to surge to $4 billion. However, the subsequent deletion of the post within hours led to a rapid crash, resulting in substantial losses for investors.

• Crypto job scams: Fraudsters pose as recruiters, luring victims with fabricated job offers to steal cryptocurrency and sensitive data. These positions usually offer easy money in return for “jobs” that don’t require any specific expertise. For instance, the fraudster may be offering 100 US dollars for watching an hour of advertisements. These scams are designed to trick individuals into depositing crypto with fraudsters and getting access to critical information such as passwords to their wallets.

• Wallet drainer scams: Crypto drainers are designed to steal your digital assets by transferring them to a scammer’s wallet. These schemes tend to use social engineering, where fraudsters build trust with you through deceptive emails, calls and fabricated documents. They create fake crypto websites, enticing you with promises of airdrops or non-fungible token (NFT) minting. You end up approving transactions, believing you are signing legitimate contracts or claiming rewards, only to have your wallet emptied.
• Fraudulent trading platform: The scammer creates a deceptive website or application, persuading victims to deposit funds by presenting it as an exclusive investment opportunity. These fraudulent platforms are designed to look authentic, often mimicking actual price movements and generating fake profits to appear legitimate.
• Imposter scams: Imposter scams involve fraudsters posing as trusted figures, such as company executives, support staff or government officials, to deceive victims into sending funds or sharing sensitive information. These scammers often use fake websites, social media accounts or phishing emails to appear credible. 
• Bitcoin mining scams: Bitcoin mining scams lure investors with fake opportunities to fund mining operations. Scammers claim invested capital will build the necessary infrastructure, like GPUs and servers, promising a share of the mined Bitcoin (BTC) as returns. But these investments are fraudulent, and the promised infrastructure rarely, if ever, exists.

Steps taken by other US agencies and states to raise crypto scam awareness

Protecting crypto investors from these fraudulent practices requires a robust and multifaceted approach. US federal and state regulators are collaborating to educate investors about emerging scam patterns and compile a comprehensive defense against fraudsters.

The Federal Trade Commission (FTC) protects consumers from scams. Users can report fraudulent activities on the FTC website and also find information on different types of scams. The FTC also manages the National Do Not Call Registry, which helps consumers block unwanted calls. 

Another key agency, the Consumer Financial Protection Bureau (CFPB), plays an active role in regulating crypto assets. It issues fraud warnings, investigates companies, and reviews consumer complaints. 

Several US states have also taken initiatives to combat scams:

• New York: The New York Attorney General’s Office runs the Consumer Frauds and Protection Bureau, which investigates scams and offers tips to help consumers stay safe.
• Massachusetts: The Massachusetts Attorney General’s Office uses advanced tools like the TRM Labs blockchain intelligence platform to trace stolen funds and fight crypto-related scams.
• Texas: The Texas Attorney General’s Consumer Protection Division assists scam victims and guides them to avoid fraud.
• Florida: The Florida Department of Agriculture and Consumer Services maintains a Consumer Protection webpage with scam prevention tips and a complaint submission option.

The US follows a multi-layered approach to crypto scam prevention and consumer protection. Federal agencies like the FTC and CFPB provide nationwide oversight and resources regarding the crypto space, while state-level initiatives offer localized support and specialized tools. This collaborative effort, combining education with enforcement, underscores the importance of vigilance and proactive measures in dealing with the complex landscape of scams.

However, due to the fragmented crypto crime reporting system in the US, industry leaders advocate for a unified platform that consolidates data and allows victims to track complaints. While still in development, understanding this need helps set realistic expectations and supports ongoing reform efforts.

As more stakeholders push for standardized measures, such a platform could significantly improve transparency, support victims, and foster stronger accountability within the crypto space.