California regulator warns of 17 crypto websites suspected of fraud

The California Department of Financial Protection and Innovation (DFPI) has issued 17 separate advisories over two days against cryptocurrency brokers and websites it suspects are fraudulent.

The list includes Tahoe Digital Exchange, TeleTrade Options, Tony Alin Trading Firm, Hekamenltd/Tosal Markets Limited, Trade 1960, Yong Ying Global Investment Company Limited, Unison FX, VoyanX.com and ZC Exchange, to name a few.

Also, there are two copycat sites billing themselves as two big names in the cryptocurrency industry with eth-Wintermute.net and UniSwap LLC.

As of this writing, the DFPI’s consumer alert page has posted 17 alerts between December 27 and 28, stating that these companies “appear to be engaged in fraud against California consumers.”

It is not common for the DFPI to issue so many alerts in one go, suggesting that the number of reports of crypto scams may have increased in the latter stages of the year. The DFPI typically issues sporadic notices of company investigations or notices of certain incidents.

The last time the DFPI sent out such a large batch of cryptocurrency alerts was on June 15, when it rang the alarm bells about 26 dubious crypto platforms.

The warnings came in response to citizen complaints against brokers and websites, with the DFPI saying people have reported losing anywhere from $2,000 to $1.2 million in some cases. The DFPI, however, merely says that these websites “appear to be engaged in fraud.”

A key theme alleged in most of these warnings involves pig slaughter scams, which involve an individual or group creating a fake identity online to build fake relationships or friendships via social media, messaging apps and dating.

In a pig slaughterhouse or romance scam, a scammer typically spends weeks or months building the fake kinship to gain the victim’s trust, before gradually shifting the conversation to investments and enticing them with investment “opportunities” that are often too good to be true.

Ultimately, the ultimate goal is to get the victim to invest in cryptocurrencies via a copycat version of a legitimate website, such as UniSwap LLC and eth-Wintermute.net in this case, or by transferring funds to a shady wallet address.

Accompanying the slaughter of the pigs, the alleged scammers are said to have implemented another tactic described as an “Upfront Fee Scheme,” where the bad guys will demand large sums of money to process fake withdrawals from their scam sites.

If the victim falls for it, the scammer not only pockets the initial investment, but also an extra cut, before promptly cutting off all forms of contact.

Related: The scammers impersonate the US State Department, claiming to help affected FTX users

“DFPI urges consumers to exercise extreme caution before responding to any solicitation offering investment or financial services. To verify if an investment or financial services provider is licensed in California,” the DFPI said.