Fraudsters are using fake investment platforms, phishing attacks, and AI-generated endorsements to deceive victims. Scam losses reached billions, with pig butchering and phishing among the most damaging schemes. Canadian regulators also recently warned of frauds exploiting trade war fears, while Coinbase’s security chief, Philip Martin, called for a unified crypto scam reporting system in the US to improve enforcement and victim support. Rising Crypto and AI Scams Cost Investors The California Department of Financial Protection and Innovation (DFPI) identified seven new types of cryptocurrency and artificial intelligence-related scams that emerged in 2024. The regulator reported receiving 2,668 complaints from users who fell victim to fraudulent schemes, many of which were not previously recorded. Among these were fake Bitcoin mining investment schemes, where scammers lure victims with promises of high returns, and deceptive crypto gaming platforms that encourage users to deposit funds before draining their wallets. Other reported scams included fraudulent job offers requiring crypto transfers and private information, phishing attacks that steal private keys through fake airdrops, and fake investment groups operating on WhatsApp and Telegram. Additionally, AI investment scams promising unrealistically high returns have surfaced, while some users reported losing crypto after interacting with certain fraudulent websites. (Source: DFPI ) The very quick growth of the AI industry certainly contributed to the expansion of cyber fraud. A rise in crimeware-as-a-service (CaaS) was also noticed, where skilled hackers and cybercriminals sell their tools to less experienced offenders, which only complicates law enforcement efforts even more. DFPI Commissioner KC Mohseni urged the public to be very cautious when dealing with unknown platforms and advised users to verify website domains to avoid fraudulent imitations. Through its state-level partnerships, the DFPI claims that it shut down more than 26 fraudulent crypto websites and uncovered $4.6 million in user losses over the past year. Meanwhile, the California Department of Justice (DOJ) took down 42 crypto scam websites in 2024, which collectively defrauded victims of $6.5 million. This was equal to an average loss per person of more than $146,000. The DOJ also pointed out some common warning signs that are associated with these scams, like guarantees of high returns, lack of contact information, and fake prize offers. Many of these fraudulent platforms were also missing from legitimate crypto industry directories like CoinMarketCap. (Source: California DOJ ) A report from on-chain security firm Cyvers identified pig butchering schemes as one of the most financially damaging scams of 2024 as it cost the industry an estimated $5.5 billion across 200,000 cases. Additionally, blockchain security firm CertiK’s annual Web3 security report flagged phishing attacks as the most dangerous security threat of the year, with losses amounting to $1 billion across 296 incidents. Crypto Scammers Exploit Trade War Fears More recently, securities regulators in Alberta and New Brunswick warned that crypto scammers are using fake news articles and the likeness of government figures to exploit fears surrounding the ongoing trade war. The Alberta Securities Commission issued an alert on March 7 about a crypto investment scam called CanCap, that falsely claimed endorsement from then-Prime Minister Justin Trudeau through a fabricated news article appearing to be from Canada’s national public broadcaster, CBC. The fake article suggested that Trudeau was promoting a digital currency investment program as a response to US tariffs. Similarly, the Financial and Consumer Services Commission of New Brunswick flagged that CanCap used a fraudulent article that was designed to mimic the Telegraph-Journal, falsely stating that Premier Susan Holt endorsed the platform. The commission stated that the scam article included a fake transcript of an interview with Holt and doctored photos depicting her unveiling the project. Uncertainty surrounding US trade policies contributed to the financial anxiety among Canadians, especially after President Donald Trump imposed a 25% tariff on Canadian goods in February. He partially rolled it back, but then quickly threatened a 250% tariff on lumber and dairy. Mark Carney, who replaced Trudeau as prime minister on March 9, called Trump’s actions harmful to Canadian families and vowed to fight back in the trade war. Regulators warned that scammers are taking advantage of economic uncertainty by using artificial intelligence to fabricate endorsements and generate content to make fraudulent investment schemes look more legitimate. They warned that these schemes are highly adaptable, as the scammers frequently rebrand under new names like CanCentra and Immediate Flectinium. Crypto-related scams, exploits, and hacks caused global losses of close to $1.53 billion in February alone. This was due to the $1.4 billion attack on crypto exchange Bybit, according to blockchain security firm CertiK . Coinbase Calls for Unified Crypto Scam Reporting System Coinbase chief security officer Philip Martin called for a more streamlined approach when it comes to reporting crypto scams in the United States. He argued that the current system is too fragmented. At the SXSW conference in Austin, Texas, Martin mentioned some of the challenges victims face in navigating the patchwork of agencies handling financial and internet crimes. He believes there is a need for a unified reporting system to better quantify the scale of the problem and allocate government resources more effectively. Currently, victims report scams to various federal and state-level agencies, including the FBI’s Internet Crime Complaint Center (IC3). However, Martin noticed that many victims feel like they are “screaming into the void” when submitting complaints, as they rarely receive feedback or updates on their cases. He suggested consolidating reporting platforms into a single system that will centralize data and provide victims with more transparency. FBI’s Roger Campbell (center left) on a panel with Coinbase’s Philip Martin (center right). Other panelists include former Twitter safety lead Yoel Roth (right) and MSNBC reporter Mackenzie Sigalos (left) During a panel on online fraud, retired FBI agent Roger Campbell agreed with Martin’s concerns, and described the reporting process as frustrating and ineffective. He pointed to the UK’s centralized crime reporting system as a model for improving victim support and investigative efficiency. Campbell noted that victims who report scams to the IC3 rarely hear back, which can leave them feeling re-victimized. Martin also talked about the lag in scam reporting, where fraudulent schemes may go unnoticed for months before authorities finally become aware of them. Additionally, he stressed that most crypto scams are conducted from outside the US in countries like Myanmar and Laos, making enforcement efforts difficult. He argued that international cooperation should be a priority to ensure that scammers have no safe havens. The discussion comes as the California Department of Financial Protection and Innovation reported receiving over 2,600 complaints in the past year. Overall, the growing prevalence of scams proves that there is a serious need for a more effective reporting framework to combat financial fraud in the crypto space.
