The US Federal Bureau of Investigation (FBI) has issued a warning to cryptocurrency investors about false applications aimed at defrauding them.
The FBI has identified 244 victims of this fraudulent behavior between November 1 2021 and May 13 2022 and estimated the approximate loss from this activity to be $42.7 million.
The warning noted that the FBI had observed cyber criminals taking advantage of the interest in cryptocurrency and mobile banking by posing as legitimate US investment services. Using their names and logos, the fraudsters contacted US investors, and then attempted to convince them to download fraudulent mobile apps. The apps were then used to defraud investors of their cryptocurrency.
The criminals created fake websites and used the name of former legitimate cryptocurrency service YitBit in addition to Supayos (aka Supay), an Australian currency exchange business. It has been suggested by the FBI that this was an attempt to make the scam apps seem more legitimate.
In posing as YitBit, scammers were able to defraud at least four victims of $5.5m. After downloading the fake app and depositing funds to the account set up by the hackers, victims were then told they had to pay taxes in order to withdraw funds. This resulted in victims being unable to withdraw any investments deposited into the fraudulent app.
The agency said in its statement that it “encourages financial institutions and their customers who suspect they have been defrauded through fake cryptocurrency investment apps to contact the FBI via the Internet Crime Complaint Center or their local FBI field office.”
Additionally, the Bureau suggested that cryptocurrency investors “verify an app is legitimate before downloading it by confirming the company offering the app actually exists, identifying whether the company or app has a website, and ensuring any financial disclosures or documents are tailored to the app’s purpose and the proposed financial activity.”
It also suggested US investment firms “inform customers as to whether the financial institution offers cryptocurrency investment services or other related services and methods to identify legitimate communications from the institution to customers” and encouraged them to “periodically conduct online searches for [their] company name, logo, or other information to determine if they are associated with fraudulent or unauthorized activity.”
Read the full report here.