California launches a crypto fraud tracker

After losing about two-thirds of their value in 2022, cryptocurrencies have regained some of their market mojo since then — they’re now worth about half of what they were last April, according to TradingView. So you might be tempted to respond to one of the countless crypto sales ads that land in your inbox and browser, hoping it’s a real rally and not a dead cat.

Before you put your money at risk, however, the California Department of Financial Protection and Innovation has a new website worth visiting.

Launched on Thursday, DFPI’s Crypto Scam Tracker is a searchable collection of the complaints the agency has collected about crypto offers that now 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 verified angry Yelp reviews. Nevertheless, it is valuable in at least three ways.

First, search for complaints about the company or website you are considering doing business with. Have others received the same pitch, and if so, how has it worked for them? Scam sites tend to pop up and disappear quickly, so the absence of complaints is not in itself proof of legitimacy.

Second, you can search for keywords that appear in the pitch you’re reviewing, such as “forex” if the pitch involves foreign currency trading or “deposit” if the business wants you to deposit a certain amount. Look for similarities between what you have been offered and what other consumers have complained about.

Third, the site includes a glossary that describes a variety of scams that fraudsters perpetrate in the crypto market. At least be sure to read the entry on “Pork Slaughter Scams.” You certainly won’t fall for one of these.

“We’ve heard from consumers that fraud 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 fraud. We also want to encourage people to report fraud – it helps us to keep all Californians safe.”

Where the site can be most useful is in the patterns it reveals in the behavior of crypto-ripoff artists. A frequent theme of the complaints is fraudulent behavior by websites with names that reflect a well-known crypto brand, with only a few letters changed.

According to the DFPI, such “fraudulent” websites are one of the most reported scams. “The companies or websites listed may sound like the names of other companies or websites that also operate on the market,” the agency said. “When companies or websites (fake or not) have names that are similar or sound similar, the potential confusion created for consumers is real.”

Here’s one example of a complaint from Scam Tracker, citing the site coinbasetv.com – a play on Coinbase, a top crypto exchange. Please note that the agency has not confirmed the complaint:

“The victim met ‘Chris Martin’ on the Facebook Dating app. They exchanged text messages and then moved the conversation to Telegram. At one point, ‘Chris’ suggested that the victim invest in cryptocurrency. The victim transferred a small amount of money to Coinbase and Crypto.com, and then forwarded the cryptocurrency to the coinbasetv website to test the website 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 site. But when she tried to withdraw money, she was told she had 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 that everything will be fine and that she should get a loan to pay the fee to release the funds.”

Attempts to connect to the coinbasetv site and get comments were unsuccessful on Thursday.