California Attorney General Rob Bonta announced on March 10 that the state had taken decisive action against fraudulent cryptocurrency schemes by shutting down dozens of scam websites. This crackdown highlights the growing threat of crypto-related scams and the efforts of law enforcement agencies to combat financial fraud.
Massive Crypto Scam Operation Uncovered
In 2024, the California Department of Justice (DOJ) successfully shut down 42 fraudulent websites that scammed innocent victims out of at least $6.5 million. The average loss per victim amounted to a staggering $146,306, demonstrating the devastating impact of these scams on individuals seeking legitimate investment opportunities.
These websites were primarily used in “pig-butchering” scams, a method where fraudsters manipulate victims into believing they are making lucrative crypto investments. Bonta emphasized the dangers of these schemes, stating: “Scammers can use deception and emotional manipulation to take advantage of people looking for connection.” He praised the DOJ’s collaboration with the Department of Financial Protection and Innovation (DFPI) in their mission to protect consumers from crypto fraud.
DFPI’s Role in Combatting Crypto Fraud
DFPI Commissioner KC Mohseni reinforced the agency’s commitment to educating consumers about the evolving tactics of crypto scammers. “As crypto scams evolve, DFPI’s Crypto Scam Tracker helps empower consumers to stay vigilant,” he noted. He also stressed the importance of verifying website domains and avoiding platforms that exhibit warning signs of fraud.
The DOJ and DFPI have identified ten key warning signs that indicate a crypto scam website:
- Unrealistic Investment Returns – Any platform promising high returns with no risk is likely fraudulent.
- Lack of Contact Information – Legitimate investment platforms have transparent contact details.
- Plagiarized Content – Scammers often steal text, images, or testimonials from legitimate sites.
- Grammatical and Spelling Errors – Poorly written website content is a red flag.
- Unverified Licensing and Regulation Claims – Fraudulent sites often falsely claim to be registered.
- Unsolicited Contact via Social Media or Texts – Scammers frequently initiate contact out of the blue.
- Requests for Personal or Financial Information – Legitimate platforms don’t ask for sensitive details via email or text.
- Complicated or Fake Withdrawal Processes – Scammers prevent victims from withdrawing funds.
- High-Pressure Tactics to Invest More – Encouraging victims to reinvest continuously is a sign of fraud.
- Fake Endorsements or Media Coverage – Scammers may falsely claim endorsements from celebrities or news outlets.
Inside the Pig-Butchering Crypto Scam
“Pig-butchering” scams, named after the practice of fattening up livestock before slaughter, begin with scammers reaching out to victims via text messages or social media. The fraudsters slowly build trust, sometimes engaging in weeks or months of friendly communication before introducing a supposed “investment opportunity.”
Victims are directed to fake cryptocurrency investment platforms that display fabricated account balances, giving the illusion that their money is growing rapidly. Encouraged by these false gains, victims often invest more significant sums. However, when they attempt to withdraw funds, they discover the site is fraudulent, and their money is lost forever.
Many victims feel too ashamed to report the crime, fearing judgment or embarrassment. However, authorities strongly encourage reporting to law enforcement, the DOJ, DFPI, or the FBI’s Internet Crime Complaint Center.
California Officials Urge Caution
Attorney General Bonta issued a stern warning to Californians: “Do not send money to anyone you have never met in person.” He urged individuals to be extremely cautious and to conduct thorough research before engaging with any online investment platform. Officials advise that if something seems too good to be true, it likely is.
How to Protect Yourself from Crypto Scams
Given the increasing sophistication of online fraud, here are practical steps to safeguard your investments:
- Verify Website Authenticity – Always check for legitimate domain registrations and company licensing.
- Use Reputable Crypto Exchanges – Stick to well-known exchanges with strong security measures.
- Avoid Unsolicited Investment Offers – Be wary of strangers offering investment opportunities.
- Monitor Regulatory Warnings – Check official financial authorities for warnings about known scams.
- Report Suspicious Activity – If you suspect fraud, report it to the appropriate authorities immediately.
on the Crackdown on Crypto Scams
The California DOJ’s decisive action against fraudulent crypto schemes underscores the persistent threat of online scams and the importance of staying informed. With ongoing collaboration between regulatory agencies, law enforcement, and consumer protection organizations, the fight against crypto fraud continues.
By remaining vigilant, verifying investment opportunities, and reporting suspicious activity, investors can better protect themselves from falling victim to sophisticated scams in the digital asset space.
