California Financial Regulators Warn Public to Beware of AI and Cryptocurrency Scams

The California Department of Financial Protection and Innovation (DFPI) and the Department of Justice have issued a reminder to the public about scams related to cryptocurrency and artificial intelligence technology.

According to the regulators, fraudsters have been using fake investment platforms, phishing attacks, and advertisements claiming to be based on AI technology to trick victims, causing tens of millions of dollars in losses since 2024. While regulators are cracking down on this, there is still a need for investors to remain vigilant.

Through the 2,668 customer complaints received by the DFPI, regulators have uncovered a number of new scams that had not previously been recorded, many of which are also linked to fake bitcoin mining schemes. These scams lured potencial victims with high profits and fake cryptocurrency investment platforms.

Regulators also cited recruitment scams demanding crypto payments, investment groups on WhatsApp and Telegram, and investment advertisements that use deepfake to steal the images of public figures and pretend to be legitimate.

The development of artificial intelligence technology has also led to the development of “Crime as a Service”, where inexperienced scammers purchase malicious tools provided by hackers, making it more difficult for authorities to combat online fraud.

Among various types of scams, pig-butchering scams caused the most serious loss to victims, with over 200,000 such scams costing victims $5.5 billion. Scammers establish trust with their victims and then manipulate them into participating in bogus investment activities.

DFPI Commissioner KC Mohseni emphasized the importance of verifying the authenticity of every website's domain names and avoiding investment opportunities that sound too good to be true.

Regulators have taken actions against the situation. In 2024, California regulators took down 26 fake cryptocurrency websites and the California Department of Justice shut down 42 fraudulent websites, discovering tens of millions in losses.

The rise of artificial intelligence technology and sophisticated cryptocurrency scams have challenged cybersecurity. While regulators have acted on this, investors still need to remain vigilant.

Authorities advised the public to verify the authenticity of all investment platforms, avoid promises that are too good to be true, and report suspicious activity to regulators.