FBI warns about fake cryptocurrency apps

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The FBI has warned financial institutions and investors about the increased risks of fake cryptocurrency apps.

The federal agency issued the warning on Monday, noting the growing number of cybercrimes involving attempts to claim to be legitimate cryptocurrency investment firms and convincing both companies and investors to download questionable apps. At least 244 victims have been defrauded by these fake apps and have lost $42.7 million, according to the FBI. The announcement arises as the cryptocurrency market recovers from an economic “winter.”

“The FBI has observed cybercriminals contacting U.S. investors, fraudulently claiming to offer legitimate cryptocurrency investment services,” the notice reads. “and convincing investors to download fraudulent mobile apps, which the cybercriminals have used with increasing success over time to defraud the investors of their cryptocurrency.”

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The notice explicitly names a few special cases in which cybercriminals convinced others to download fraudulent apps and lose their cryptocurrency assets. For example, a group of criminals pretended to be part of YiBit, a financial tech company, and convinced at least four victims to download an app and deposit their crypto assets into a wallet controlled by YiBit. The victims could not withdraw funds from the app afterward and lost $5.5 million in assets.

The FBI recommended that financial institutions take precautions to counter these thefts. These included the institutions warning customers about the activity, providing accurate information about the company’s cryptocurrency-related practices, and conducting searches online to determine if their name or logo was being used for fraudulent activities. The notice also recommended that consumers be wary of unsolicited requests to download investment applications, verify if the app is legitimate, and treat all unsolicited requests to download investment apps with skepticism.

Cryptocurrency has been a regular source of fraud, which is why lawmakers and regulators have advocated additional restrictions. Federal Reserve Vice Chairwoman Lael Brainard called for more regulations on the industry after a July 8 appearance at a Bank of England conference event. The SEC is also working on additional investor protections, according to agency Chairman Gary Gensler.

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The FBI has also increased its efforts to challenge cryptocurrency-related crimes. It added “Cryptoqueen” founder Ruja Ignatova to its Ten Most Wanted Fugitives list on June 30. Ignatova founded OneCoin, a fake cryptocurrency company, in 2014 and defrauded investors for $4 billion.