Crypto scams have been a significant threat to investors across the globe, alarming regulators to take necessary steps in that direction. Recently, the regulators in California released a tracker to help investors fight bad actors.
Sources reveal that scammers have undertaken various steps to steal funds. The increasing scams using a combination of spoofing and phishing to offer initial coin offerings (ICOs) or newly issued tokens/coins at incredible prices have become a growing concern in the crypto industry.
Notably, these scams target individuals who are relatively new to the industry and lack awareness of the underlying technology, making them vulnerable and easy targets of fraudulent schemes. Scammers use tactics including spoofing and phishing to disguise them as legal messages or websites.
Spoofing involves falsifying the sender’s identity, while phishing involves tricking the recipient into divulging sensitive information, such as passwords or financial data. The combination of both tactics is commonly used to create convincing scams.
With ICOs or newly issued tokens/coins, scammers attempt to create fake websites or social media accounts, mimicking legitimate offerings. Then they offer tokens or coins at lucratively lower rates or with promises of high returns on investment. Innocent investors with lesser awareness can fall prey to these scams and lose their investment or personal details.
Experts suggest that to avoid falling prey to these scams, one must conduct thorough research and due diligence before making investments. In addition, investors should be wary of unsolicited emails or messages. They should always verify the legitimacy of any website or social media account.
To combat the growing crypto scams, the California Department of Financial Protection and Innovation (DFPI) released a tracker to help traders and investors spot possible industry threats. The Crypto Scam Tracker is an online tool allowing investors to report any crypto-related crime.
The tracker is designed to help California’s DFPI identify and track fraudulent activities in the crypto market. Users can provide details about the fraud, such as the name of the company or individual behind it and the money lost. Then the DFPI will use the information provided to investigate and track down the suspects and take action against the accused.
Additionally, the tool will provide users with information regarding common crypto scams and relevant tips on avoiding them. The initiative aims to help Californians spot and avoid crypto scams easily by acting as a database for investors searchable by company name, scam type, or relevant keywords regarding the suspected scam. Following is a screenshot from the tool with two listed scams.
The tracker details apparent crypto scams identified through a review of complaints submitted by the public. The regulator also shared a screenshot quoting Clothilde Hewlett, Commissioner of DFPI.
This is a commendable initiative by the California regulator to protect investors from fraud in the crypto space. Scams have become increasingly sophisticated, and many investors are falling prey to such fraudulent practices.
Our hope is that this tool will be a resource for Californians to use before they are targeted or make financial decisions and help Californians from falling prey to prevent future scams. We also want to encourage people to report scams — it helps us keep all Californians safe.
Elizabeth Smith, a spokesperson for the DFPI
Crypto scams have been on an incessant rise year after year. Todayq News published a study from Solidus Labs in December, stating that more than 350 fraudulent crypto tokens were created daily last year to defraud millions of investors. The report also claimed an approximate 41% increase last year compared to 2021, where the total number of scam tokens detected was 83,400.