California launches website to combat cryptocurrency scams and highlight risks

(AP Photo/Kin Cheung, File)

The California Attorney General’s office announced the launch of a new website Tuesday which will provide information about risks and scams associated with the purchase of cryptocurrencies.

The website includes tips about purchasing and trading cryptocurrencies and non-fungible tokens (NFTs), as well as frequently asked questions regarding the sale and trading of digital-only assets.

“From celebrities to your next-door neighbor, it seems like everyone these days is investing in cryptocurrency based on the promise of fast and easy money,” California Attorney General Rob Bonta said in a news release. “Don’t fall for a fantasy – Cryptocurrency, like all investments, carries significant risks, and there’s no guarantee that you’ll see large – or any – returns.”

Bonta said the website will provide resources for Californians looking to get into the exchange of online currency with advice about avoiding scams and other pitfalls.

The Attorney General says anyone looking to join the cryptocurrency craze should always be sure to do extra research before investing in any specific asset, and urged those who are spending money to spend it wisely.

“You should only invest money you are willing to lose, and you should be on the lookout for red flags and potential scams,” Bonta said.

Unlike money that is kept in a bank or credit union, there is no government guarantee or insurance for digital assets, the AG’s office says. If you lose your money on a crypto scam or a coin goes bust, you’re on your own.

Bonta recommends Californians stay up to date with the latest cryptocurrency scams by visiting the new website, as well as subscribing to updates from other official agencies that deal with and monitor the exchange of cryptos.

Buyers are also encouraged to watch out for the signs of cryptocurrency scams.

The Attorney General’s Office provided the following warning signs to look out for when purchasing and trading cryptocurrency:

  • Guarantees of large returns in exchange for money or cryptocurrency:  If it sounds too good to be true, it probably is. Remember, there are no guarantees of large returns with crypto assets.
  • Token names that are similar to well-known cryptocurrencies: Scammers will use names for their tokens that are incredibly similar to cryptocurrencies like bitcoin and ether in hopes that you will either assume their tokens are the real thing or that they are associated with the real cryptocurrencies. Look at the name carefully, and do a little research to see if the crypto asset is legitimate.
  • Requiring payments in cryptocurrency: No legitimate companies will force you to pay in cryptocurrencies or other crypto assets.  
  • Requiring large upfront payments: Requirements that you pay a significant amount of money to participate in a particular money-making venture is a signal that you are being invited to a scam.
  • Unsolicited phone calls or emails: Never give your account information to someone who calls or emails you unsolicited, even if they claim they are from a legitimate company. Instead, hang up the phone or close the email, go to the company’s website, and use the phone number or email on the website to contact the company.
  • Celebrity endorsements: Not all celebrity endorsements mean that the underlying crypto asset is a scam, but it’s important to remember that celebrities get paid a lot of money to promote these assets.

If you believe you’ve been scammed or think someone is attempting to scam you, you are urged to file a complaint with state and federal regulators.

Complaints can also be filed with the California Department of Financial Protection and Innovation, the Federal Trade Commission and the Securities and Exchange Commision.

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