Fake cryptocurrency apps are duping US investors, FBI reports

The FBI is warning about fake cryptocurrency apps targeting US investors after nearly 250 victims lost a total of $42.7 million. (Photo: Anthony Kwan/Getty Images)

The roller coaster of cryptocurrency valuations has recently taken a new turn: Criminal groups are increasingly defrauding investors with their fraudulent crypto apps, according to a recent FBI advisory.

Cybercriminals are becoming more aggressive in their schemes and are directly targeting US cryptocurrency investors, “pretending to offer legitimate cryptocurrency investment services and convincing investors to download fraudulent mobile apps that cybercriminals have used with increasing success over time to defraud investors of their cryptocurrency .” according to the private industry notice released last week by the FBI Cyber ​​​​Division.

The FBI has reportedly identified 244 victims who lost a total of $42.7 million in recent months to fraud, according to the release, which specifically targeted U.S. financial institutions and customers “who suspect they have been defrauded via fake cryptocurrency investment apps”.

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“Cybercriminals threaten to create fraudulent cryptocurrency investment apps to exploit legitimate cryptocurrency investments, defraud US investors and damage the reputation of US investment firms,” ​​the FBI advisory reads.

The FBI advisory pointed out that cybercriminals are taking advantage of the recent trend to “offer innovative financial institutions[ing] mobile applications to improve user experience and increase legitimate investment. … The FBI has observed cybercriminals using legitimate USBUS names, logos and other identifying information, including creating fake websites with that information, as part of their ploy to win over investors.

In fact, given the growing popularity and ubiquity of cryptocurrency investments and rapid changes in valuations, crypto fraud is “more prevalent than ever,” according to a late June report from fraud prevention firm Sift. According to Sift’s findings, more than one in five consumers (22%) who have encountered crypto scams have lost money, and more than 2 in 5 (43%) have encountered scams that asked them to participate in fake crypto exchanges.

At the root of many of these crypto scams is “misleading or fraudulent content,” particularly posted on social media, which has led unwitting investors to fall for these increasingly sophisticated fake apps, Sift reports. Nearly three-quarters (73%) of consumers surveyed by Sift said they see misleading content at least once a week, and two-thirds (65%) said they consider social media the “most dangerous source.” » false information. .

Names of fake apps closely linked to legitimate crypto exchanges

Not only are these attacks becoming more frequent and sophisticated, but scammers are also leveraging legitimate apps and financial concerns along with fake information to steal more and more money from their victims each time. individual scam. Between December 22, 2021 and May 7, 2022, the FBI discovered that “unidentified cybercriminals claiming to be a legitimate US financial institution defrauded at least 28 victims of approximately $3.7 million”.

In this particular scheme, cybercriminals convinced victims to download an app that used the name and logo of a real US financial institution and deposit cryptocurrency into wallets linked to victims’ accounts on the app.

“When 13 of the 28 victims attempted to withdraw money from the app, they received an email telling them to pay taxes on their investments before making withdrawals,” the FBI reported in its advisory. . “After paying the supposed tax, the victims remained unable to withdraw money.”

And that’s just the tip of the iceberg of crypto scams: Between October 2021 and May 2022, a group called YiBit1 (close to the same name as a real crypto exchange that shut down in 2018) stole around $5.5 million from at least four victims. In November 2021, the cybercrime group Supayos (also known as Supay2, which is very similar to the name of the legal currency exchange in Australia) extorted $900,000 from a victim by convincing the crypto-investor that there was a ‘minimum balance’ that needed to be deposited into the account.

As cybercriminals increasingly exploit names or links to legitimate financial and cryptocurrency issues, it has become harder for even savvy cryptocurrency investors to distinguish right from wrong. One-third (33%) of consumers who have experienced payment fraud identified financial services websites as “the highest risk,” according to Sift’s Q1 Digital Trust and Safety Index. The Sift report also revealed that crypto exchanges alone saw a 140% increase in “abuse” in the first quarter of this year.

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