Crypto: Handle with caution
Bogus text messages, spam calls, and phishing are just part of the new toolbox of nightmares that scammers have available to them. And crypto — hard-to-trace, decentralized, anonymized — is practically custom-made for today’s online scammer.
Crypto scams have increased by 900 percent since the start of the pandemic, according to the FTC.
In 2021 alone, more than 46,000 Americans lost more than $1 billion to crypto-related fraud.
California is home to a vibrant and innovative crypto ecosystem. To help mitigate the risks associated with cryptocurrencies, we are working to implement the new Digital Financial Assets Law licensing program, enhance regulatory clarity, consumer education, and enforcement.
Exercise caution when dealing with crypto. Consult with trusted advisors, and with state and federal consumer watchdog organizations like DFPI.
Stay safe by understanding the risks
Crypto assets can now be held and traded in exchange-traded funds (ETFs). Because of this, they are now widely available, but that doesn’t make them right for every investor.
- Don’t put in more money than you can afford to lose. Crypto assets are not protected by deposit insurance or error resolution rights.
- Beware of virtual pyramid and Ponzi schemes. Watch out for scammers or get-rich-quick schemes. Before investing, check credible sources of information such as:
- Remain vigilant. Change passwords often and store them safely. Consider “cold storage” such as a hardware wallet for your assets, and always make sure you’re on a secure internet connection.
- Take the time to understand the technology. Subscribe to legitimate industry publications and stay up-to-date on new developments in the space.
- Do your own research and stick to the fundamentals. Beware of assets tied solely to speculation.
We support Californians like you.
In 2023, Governor Gavin Newsom signed the Digital Financial Assets Law (DFAL). This law creates a comprehensive regulatory program for many crypto companies, empowers DFPI to license and supervise digital financial asset-related companies that serve California residents, and provides important consumer protections. Learn more about the DFAL.
In our effort to keep pace with change in the world of crypto assets, we’ve developed resources to help you stay alert:
Financial rights are important to Californians, which means they’re important to us.
Financial rights are at the core of the DFPI’s mission. To protect your rights, we regulate and oversee financial services across the state. That begins with serving as the state watchdog against unfair, deceptive or abusive acts or practices (UDAAP, for short) in the financial marketplace. We work every day to investigate and stop illegal behavior, resolve complaints, and prevent consumer harm.
We also license and regulate financial institutions and industries operating in the state. In recent years, California legislators have given us more power as a financial regulator, boosting our ability to regulate banks, credit unions, money transmitters, securities brokers, and lenders.
We’re your go-to if you think you’ve been the victim of fraud or that your financial rights have been violated. You can submit a complaint online, call us at (866) 275-2677 or send an email to [email protected].
Be aware: Common kinds of crypto asset scams
- Phishing scams include spam emails, bogus websites, and messages designed to trick you into providing your private keys, passwords, and sensitive information.
- Ponzi and pyramid schemes promise eye-watering returns and low risk. By corruptly relying on funds from new investors to pay returns to earlier investors, they create the illusion of profitability.
- Fake ICOs (Initial Coin Offerings) are when scammers create bogus ICOs that mimic legitimate fundraising campaigns for new cryptocurrencies. They tantalize victims with the promise of new tech or great returns.
- Fake exchanges and wallets mimic legitimate platforms and fool unsuspecting users into depositing their funds into non-existent platforms.
- Malware and hacking are used to steal from users’ crypto asset wallets or exchange accounts. This can include malware-infected software, phishing links, or hacking into poorly secured exchanges or wallets.
What You Can Do
File a Report Online
If you think you are the target of a scam or that your rights have been violated submit a complaint online, call us at (866) 275-2677 or send an email to [email protected].