DON’T FALL FOR A CRYPTO SCAM
Before you invest, check out California’s new site that tracks complaints about apparent schemes
After losing about two-thirds of their value in 2022, cryptocurrencies have regained a little of their market mojo since then — they’re now worth about half what they were in April, according to TradingView. So you may be tempted to respond to one of the countless crypto sales pitches that land in your inbox and your browser, hoping that it’s a real rally and not a dead-cat bounce.
Before you put your money at risk, however, the California Department of Financial Protection and Innovation has a new website worth visiting.
Launched Thursday, the DFPI’s Crypto Scam Tracker, found at dfpi.ca.gov/crypto-scams, is a searchable collection of the complaints the agency has collected about crypto offers that seem too good to be true. The complaints have been reviewed by the agency but not verified, so it’s a bit like a database of confirmed angry Yelp reviews. Nevertheless, it’s valuable in at least three ways.
First, you can search for complaints about the company or website you’re thinking of doing business with. Have other people gotten the same pitch, and if so, how has that worked out for them? Scam sites tend to appear and disappear quickly, though, so the absence of complaints is not proof of legitimacy.
Second, you can search for keywords that appear in the pitch you’re considering, such as “forex” if the offer involves foreign currency trades or “deposit” if the business wants you to deposit a certain amount. Look for similarities between what you’ve been offered and what other consumers have complained about.
Third, the site includes a glossary that describes an array of scams that fraudsters are perpetrating in the crypto market. At the very least, be sure to read the entry on “Pig Butchering Scams.” You certainly do not want to fall for one of those.
“We have heard from consumers that scam alerts help them avoid similar scams,” said Elizabeth Smith, a spokesperson for the DFPI. “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.”
Where the site may be most helpful is in the patterns it reveals in the behavior of crypto rip-off artists. A frequent theme in the complaints is scammy behavior by sites with names that echo a well-known crypto brand, with
just a few letters changed.
According to the DFPI, such “impostor” websites are one of the most commonly reported scams. “The companies or websites listed may sound similar to the names of other companies or websites that also operate in the marketplace,” the agency said. “When companies or websites (fake or not) have look- or soundalike names, the potential confusion created for consumers is real.”
Here’s one example of a complaint
from the Crypto Scam Tracker, citing the site coinbasetv.com — a play on Coinbase, a top crypto exchange. Bear in mind that the agency hasn’t verified the complaint:
“The victim met ‘Chris Martin’ on the Facebook Dating app. They exchanged text messages and then moved the conversation to Telegram. At some point, ‘Chris’ suggested that the victim invest in crypto currency. The victim transferred a small amount of money to Coinbase and Crypto.com, and then forwarded the crypto currency to the coinbasetv website to test the site and practice trading.
“Chris helped the victim through the process and also showed her his assets in his own accounts and the victim believed everything was legitimate. After a few weeks, the victim had transferred approximately $280,000 to the website. But when she tried to withdraw money, she was told she needed to pay a fee before she could withdraw the money. When she didn’t pay, they threatened to prosecute her for money laundering. She continues to communicate with Chris, who tells her everything will be okay and that she should get a loan to pay the fee to release the funds.”