In the last couple of years it appears that crypto’s been through its life cycle. We’ve been intrigued by the technology, some were fascinated by the potential for profits and altruism, few were (rightfully) skeptical, and thousands lost millions of dollars, tainting whatever credability aultristic crypto capitilism ever had. In crypto realms, consumer crypto attacks are just a fraction but to the average online user, they might be the most impactful. And unfortunately, these scams show no sign of slowing down. With the ease of use of more sophisticated large language models, more realistic messages, images, texts, voice calls could potentially lure more customers.

The State of California recently came out with a crypto scam tracker, which could function as a safeguard for wary customers. This analysis breaks down the narratives to provide supplemental information to help consumers better understand the commonalities of common scams.

What Kinds of Scams are the Most Common?

Hovor over the bubbles for the name of the entity reported!

Fraudulent trading platform (FTP) and pig butchering scams are by far the most prevalent type of crypto scams. FTP scams usually invovle slightly different domain names from legitimate crypto platforms. Initially users are allowed to withdraw small amounts, but later as the users attempt to withdraw larger earnings the sites either shut down or decline the request. These platforms can also capture users’ sensitive financial data. Pig butchering scams are initiated on social media and dating apps. Pig butchering scams caused the highest losses, totally $2.7 billion Reuters. About 12% of Americans using such apps reported victimization as of October 2023.

The reported complaint narratives can help us understand the roadmap of the scam and provide insights for consumers that could help them protect themselves. One particulariy vulnerable population are the elderly, as illustrated by the following example.

A California resident reports that his elderly father has been scammed by a stranger on the internet. He says his father received a phone call from a stranger who then gained his trust by sending text messages, and encouraging him to begin communicating through the Line app. Eventually, the stranger convinced the victim she could give him investment advice, and helped the victim move money in and out of bank accounts, retirement accounts and crypto exchanges. The victim eventually lost at least $2.7 million.

The following roadmap illustrates the general cycle of the pig butchering scams.

Roadmap of Scams

Click on the corresponding arrow for each step to learn more details and consumer tips.

Prevention and Resources

Preventing crypto scams requires vigilance and informed decision-making. Consumers ought to remain skeptical of unsolicited investment advice, especially from new or unverified online contacts and conduct thorough independent research before making any financial commitments. For additional information on identifying and avoiding crypto scams, the Federal Trade Commission (FTC) provides valuable resources and advice. If you encounter or fall victim to a crypto scam, report it immediately to the FBI’s Internet Crime Complaint Center (IC3). The Securities and Exchange Commission (SEC) also offers guidance on virtual currencies and what to watch out for in terms of fraudulent activities. Staying informed and cautious can significantly reduce the risk of falling victim to these sophisticated scams.

As the landscape of cryptocurrency continues to evolve, so too do the tactics of scammers. The breakdown of scams in California serves as a crucial reminder of the importance of consumer safety. By understanding the common patterns and tactics used in crypto scams, and equipping ourselves with the knowledge and resources to recognize and avoid them, we can better protect our investments and personal information.