California regulator flags 17 cryptocurrency websites suspected of defrauding victims

On Dec. 27 and 28, the California Department of Financial Protection and Innovation (DFPI) released a comprehensive list of over 17 crypto sites suspected of defrauding users on its homepage. 

Some of the sites mentioned are Tony Alin Trading Firm, Tahoe Digital Exchange, TeleTrade Options, ZC Exchange, Sun Bit Proa, Singapore, Reliable Option Trade, Hekamenltd/Total Markets Limited, Trade 1960, VoyanX.com, and others. The list names two copycat websites (eth-Wintermute.net and UniSwap LLC), posing as established protocols on crypto and DeFi bent on defrauding unsuspecting victims. 

In this alert, DFPI mainly warns of pig-butchering scams where fraudsters aim to build trust before the victim is introduced to “an investment opportunity” on copycat websites like UniSwap LLC and eth-Wintermute.net, whose offers are often too good to be true. 

Those seeking to recoup their lost funds have also fallen victim to fraudsters who pose as “funds recovery agents” charging a fee for their “services”. 

It is common for the DFPI to simultaneously issue a warning and release a trove of data of companies they believe to be fraudulent. Considering their activity in the second half of 2022, it could indicate that scammers and fraudsters stepped up their schemes in Q4 of 2022. 

DFPI’s efforts against suspicious crypto entities 

Due to the circumstance surrounding the collapse of BlockFi and Voyager, the DFPI, in July 2022, released a consumer alert revealing its intentions to investigate several crypto lending firms offering different shades of interest-bearing services to its customers. 

In September 2022, they also joined forces with other state regulators cracking down on cryptocurrency firms that violate security laws resulting in the suing of 11 decentralized finance accused of running investment scams. 

In December 2022, the DFPI issued a cease order against MyConstant, a crypto lending platform, forcing it to halt all marketing of its crypto-related products.