The California Department of Financial Protection and Innovation (DFPI) now offers a “crypto scam tracker” that aims to help pinpoint bogus crypto offerings and scams. Announced last week, the tracker currently lists 36 individual scams.
According to the DFPI, the scams are identified from complaints submitted by the public. As more traps emerge, the database is expected to grow.
The DFPI states that it receives “thousands of consumer and investor complaints each year.” At the same time, the DFPI states that it has not verified the losses reported by complainants.
Financial fraud has existed since the beginning of time, and as technology changes, fraudsters are frequently the first to take advantage of the changes leaving regulatory agencies scrambling to keep pace. The digital nature of crypto has led to a booming business in plots to separate good money from good people who are unsuspecting.
The site has tallied a list of different types of crypto scams. As it stands today, these are the categories listed on the Tracker.
- Advance Fee Scam – Scammer requests an upfront payment, promising a future service or a huge return on investment.
- Affinity Scams – Scammer targets members of an identifiable group
- Asset Recovery Scam – Scam by a third party requiring a fee to “recover” funds lost in a prior fraudulent transaction.
- Bait and Switch Scams – A scam to mislead buyers, whereby a seller advertises an appealing but ingenuine offer to sell a financial product or service that the seller does not actually intend to sell. Instead, the seller offers something else of lower value or none at all.
- Crypto Blackmail Scam – Scammer sends emails or physical mail to victims saying they have personal information about the victim or embarrassing or compromising photos or videos.
- Fraudulent Trading Platform – Scammer develops a fraudulent website or application and convinces victims to deposit funds to the platform under the guise of providing victims access to a unique investment opportunity.
- Hacking – Exploiting a computer system or private network inside a computer with the intent of stealing personal information.
- High Yield Investment Programs (HYIP) – Ponzi schemes that promise passive income and high returns in short periods of time through an investment of crypto assets. These schemes often offer payment structures similar to that of multi-level marketing or pyramid schemes to recruit new investors, promising early investors a percentage of the profits of other investors they recruit. Eventually, the perp may just run off with the funds. [rug pull]
- Identity Theft – Someone wrongfully obtains and uses another person’s personal data in some way that involves fraud or deception.
- Imposter Scams – Scammer impersonates a legitimate business, government agent, or well-known figure to gain access to a user’s systems and personal information for financial gain.
- Liquidity Mining Scam – Used to earn passive income with crypto assets, investors stake their crypto assets in a liquidity pool to provide traders with the liquidity to conduct transactions. Investors then expect to receive a portion of the trading fees. In the liquidity mining scam, victims move cryptocurrency from their wallets to the liquidity mining platform and see the purported returns on a falsified dashboard. Believing their investments to be a success, victims purchase additional cryptocurrency. Scammers ultimately move all stored cryptocurrency and investments made to a scammer-controlled wallet.
- Livestream Scam – Scammer broadcasts a live-stream event through an online streaming platform to market a fraudulent promotion or product.
- Pig Butchering Scams – Scammer may use a variety of methods to establish a relationship, and then gain the victim’s confidence and gradually introduce the victim to a fraudulent investment opportunity. Once Scammer has the victim’s trust, Scammer will then propose an investment opportunity related to crypto assets. However, the victim is never able to withdraw their funds from the site.
- Ransomware – Scammer gains access to a victim’s computer systems or private network, encrypts sensitive information or data, and demands a ransom from the victim to restore access to the encrypted information or data upon payment.
- Romance or Social Media Scam – Scammer adopts a fake online profile to gain a victim’s affection and trust and then uses the illusion of a romantic or close relationship to manipulate and/or steal from the victim.
- Rug Pull Scam – Variation of investment scheme where a developer attracts investors to a new cryptocurrency project through online crowdfunding, pumps up the value of the investment, and then pulls out before the project is built, leaving investors with a worthless currency.
- Tech Support Scam – Tech support scammers want victims to believe they have a serious problem with their computer, like a virus. They want victims to pay for tech support services the victims don’t need, to fix a problem that doesn’t exist.
DFPI ask that if you have been a victim of a scam or fraud, or know about a scam to let them know by filing a complaint with the DFPI online or calling DFPI at (866) 275-2677.