CALIFORNIA – Attorney General Rob Bonta warned Californians, on March 10, about the rise of fake cryptocurrency websites.
In 2024, the California Department of Justice (DOJ) shut down 42 fraudulent websites that scammed victims out of at least $6.5 million, with an average loss per victim of $146,306.
The DOJ said these scams are sometimes referred to as “pig-butchering” – named in reference to the practice of fattening a pig before slaughter.
It’s a scam where the victim is tricked into trusting someone and slowly convinced to invest more and more money, usually in cryptocurrency. In the end, the scammer takes all the money and disappears.
“I urge Californians to be vigilant and protect their finances: Do not send money to anyone you have never met in person,” said Bonta.
Website falsely shows their investment increasing
The DOJ says in a typical pig-butchering scheme, a victim receives a random text or message on social media, builds trust with the scammer, and is then directed to a fraudulent website to invest money in what appears to be legitimate cryptocurrency.
The website falsely shows their investment rapidly increasing in value and after seeing the fabricated profits, victims often drain their savings or borrow money to invest more.
However, when they try to withdraw their funds, they receive nothing, learn that the website is fake, and the scammer walks away with their money.
Top 10 Red Flags
The Department of Financial Protection and Innovation (DFPI) launched a crypto scam tracker to help Californians spot cryptocurrency-related scams and protect themselves from fraud.
Alongside the crypto scam tracker, the DOJ has highlighted the Top 10 “Red Flags” to help consumers recognize illegitimate websites, including:
- Impossible Rates of Return. Fake websites promise to leverage the amount invested and provide a rate of return of several hundred percent per year.
- No Contact Information. Fake websites will often not have a phone number, email, or physical address.
- The use of stolen or borrowed images. Fake websites will steal images of people they claim are their officers, employees, or customers.
- The use of stolen dialog and written content. Fake websites will steal written content from legitimate websites to make the fake website appear credible.
- Listed address does not exist or is a bad location. If a fake website lists an address, it is often the address of another legitimate business or a completely fictitious address.
- They offer prizes or bonuses. Fake websites will often offer generous prizes for investing, cash rewards, or overly generous referral rewards.
- Inconsistent phone numbers and addresses. If a phone number and address is listed, the phone number is often not in the same geographic location as the address provided.
- The website has not been recently updated. The scam websites, once created, are not routinely updated with new content as one would expect from a legitimate website.
- Bad Grammar and Translation. While scammers are becoming more sophisticated, fake websites will often have grammar that is inconsistent with a native speaker.
- Not on industry listings of exchanges such as CoinMarketCap.com. Legitimate exchanges tend to be listed and ranked as to their volume on crypto-industry websites such as CoinMarketCap.com.
The DOJ says if someone believes they are the victim of a scam, they should end all contact with the other party immediately and contact the local law enforcement agency. They also should report it to:
- California Department of Justice at oag.ca.gov/report
- The Department of Financial Protection and Innovation at dfpi.ca.gov/submit-a-complaint/
- FBI’s Internet Crime Complaint Center (IC3)
