FBI Warns Against Fraudulent Crypto Apps

  • The FBI has urged financial institutions to provide safe communication lines with their clients and offer frequent updates on new developments.

Cryptocurrency scams have become commonplace in recent months and have attracted the attention of global law enforcement agencies. The Federal Bureau of Investigation (FBI), has become the latest to warn against crypto fraud, pointing its focus to fake apps that lure unsuspecting users and defraud them of their earnings.

The law enforcement agency warned the public about the dangers of such applications, noting that crypto scams involving fake apps have stolen about $42.7 million from investors. In a recent advisory, the bureau’s cyber division identified 244 people who had been tricked by fake apps. According to the FBI, the fake crypto apps copied the names, logos, and other distinguishing characteristics of authentic apps. In order to get individuals to download them, these fraudulent applications have been spotted contacting cryptocurrency investors and making baseless claims that they offer genuine services.

The FBI identified a case where cybercriminals persuaded victims to download an app with the same logo as a legitimate U.S. banking institution, then encouraged them to deposit cryptocurrency into wallets that were allegedly associated with their accounts. The unsuspecting victims were then required to pay taxes on any withdrawals they sought to make using the app. However, even if the victims completed the payments, they would be unable to make withdrawals. It was merely another scheme to defraud them of extra funds.

Fraudsters engaged in another similar scheme between October 2021 and May 2022, scamming at least four victims of almost $5.5 million while masquerading under the corporate name “YiBit.”

Another app-related crime took place in November 2021,  where the thieves disguised under the alias “Supay”  The fraudsters reportedly tricked two victims by convincing them to add cryptocurrency to their app wallets, which would later become frozen unless they made more deposits.

The FBI urges investors to exercise caution when receiving unsolicited invitations to download investment-related mobile apps and to take precautions to confirm the app’s legitimacy before installing it. The advisory read,

Be wary of unsolicited requests to download investment applications, especially from
individuals you have not met in person or whose identity you have not verified. Take
steps to verify an individual’s identity before providing them with personal information
or relying on their investment advice.

The FBI Recommends Safety Steps for Investors and Institutions

Investors were also urged to take the time to verify websites, documents, and any financial disclosure to confirm if such as company exists as claimed. Furthermore, the agency advised crypto users to treat any application with limited or broken functionality with skepticism.

The FBI also outlined steps for financial institutions which would help protect their users from phony companies stealing their identities to commit financial fraud. Institutions are to alert their customers on any suspicious account and instruct them on how to report it and stay safe. In addition, crypto firms are advised to provide customers with information on the availability of cryptocurrency investment services, as well as information on how to spot genuine communications from them.

Customers should also be informed if the financial institution has a mobile app. This information should be updated often as it helps customers stay alerted in the case of a fake app. The bureau advised financial institutions to regularly perform web searches for the name, logo, or other details of their business to check if they are connected to any illegal or fraudulent activities.

According to a Federal Trade Commission (FTC) report released in June 2022, since 2021, scammers have stolen up to $1 billion in cryptocurrency, with roughly half of all crypto-related crimes coming from online platforms.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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