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Cybercriminals are using fake crypto apps to defraud investors, warns FBI

In an advisory published on July 18, the FBI warned that criminals are targeting crypto investors by designing apps that use the same logos and identifying information as legitimate crypto firms.

Image by: Wikimedia Commons

Tue, 19 Jul 2022, 09:58 am UTC

The Federal Bureau of Investigation (FBI) has issued a warning to the public about the use of fake crypto apps by cybercriminals in their schemes to steal money from their victims. The agency revealed that U.S. investors have already lost more than $40 million to these fraudulent cryptocurrency applications.

In an advisory published on July 18, the FBI warned that criminals are targeting crypto investors by designing apps that use the same logos and identifying information as legitimate crypto firms. Schemes of this type have already victimized around 244 people, according to the Cointelegraph.

“Cyber criminals are creating fraudulent cryptocurrency investment apps to exploit legitimate cryptocurrency investments, defrauding US investors and causing reputational harm to US investment firms…” the FBI wrote. “The FBI has observed cyber criminals using the names, logos, and other identifying information of legitimate USBUSs, including creating fake websites with this information, as part of their ruse to gain investors.”

The FBI uncovered three cases of fake crypto apps in its investigations. In one case, cyber criminals defrauded 28 victims of around $3.7 million between December 22, 2021, and May 7, 2022, by pretending to be an unnamed legitimate U.S. financial institution. Victims were convinced to download a fake up that used the institution’s name and logo and instructed them to deposit crypto into wallets via the app.

When the victims tried to later withdraw their crypto, they were notified to pay taxes on their investments. However, this was just a ruse to get more money from them as they still won’t be able to withdraw the crypto they previously deposited even if they sent funds to cover the supposed tax payments.

In another case, criminals were able to defraud $5.5 million from at least four victims between October 2, 2021, and May 13, 2022. Operating under the YiBit corporate names, the victims were convinced to download the company’s app and deposit crypto into the wallets associated with their YiBit accounts. Just like in the previous case, the victims were told to deposit more money for tax payments but those who did still could not withdraw their crypto.

Considering these incidents, the FBI recommends that financial institutions “proactively warn customers about this activity and provide steps customers can take to report it.” Financial institutions should inform customers where or not they offer crypto investment services and provide a method of verification if a message is a legitimate communication from the institution to customers.

The FBI also cautioned investors to be wary of unsolicited request to download investment apps and take steps to verify if an app is legitimate before downloading it. For those who receive invitations to download the app from individuals whose identities have not been verified, the agency suggests that investors should “take steps to verify an individual’s identity before providing them with personal information or relying on their investment advice.”

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