FBI warns banks and investors about fake cryptocurrency apps

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Photo (c) boonchai wedmakawand – Getty Images

Last month, the Federal Trade Commission (FTC) warned consumers about the rising threat of cryptocurrency scams. Now, the Federal Bureau of Investigation (FBI) is joining that chorus with a warning of its own.

The agency is informing banks and investors alike that it uncovered an eight-month-long spate of cybercriminals using fake cryptocurrency apps that defrauded 244 investors out of more than $42 million.

Officials say they observed scammers contacting investors with offers related to legitimate cryptocurrency investment services. Then, once the defrauders had the investors’ confidence, they would ask them to download fraudulent mobile apps. 

To sophisticated investors, apps are something that more innovative financial institutions offer to enhance user experience and increase investment. Armed with that perception, the scammers would build out their fake apps by using names and logos from legitimate financial institutions. Once the victim appeared convinced, the criminals would then have them deposit cryptocurrency into the wallets associated with the victims’ accounts on the apps. 

Three scam outcomes

In one such instance, the FBI said many victims attempted to withdraw funds from an app and received an email stating that they had to pay taxes on their investments before making withdrawals. They remained unable to withdraw funds after paying the supposed tax, and the crooks got away with even more ill-gotten gains.

In another situation, cybercriminals operating under the company name YiBit1 defrauded at least four victims out of approximately $5.5 million by using a very similar scheme. According to CryptoNews, “YiBit” is a legitimate cryptocurrency exchange. However, ConsumerAffairs found no connection between it and “YiBit1.” 

A third ruse that took place in November 2021, came at the hands of crooks who masqueraded as a company called Supayos, also known as Supay. This time, the thieves were only able to convince two people to buy into their ruse. One of the victims was told that they were enrolled in a program without their consent that required a minimum balance of $900,000. After trying to cancel the subscription, the victim was instructed to deposit the requested funds or have all of their assets frozen.

FBI issues a warning and tips

The FBI recommends that investors take the following precautions to protect themselves from fraudulent cryptocurrency scams:

Be wary of unsolicited requests to download investment applications. Consumers should be especially skeptical if the request comes from someone they don’t know or whose identity they have not verified. Take steps to verify an individual’s identity before providing them with personal information or relying on their investment advice.

Verify that an app is legitimate before downloading it. Consumers should confirm that the company offering the app actually exists, identify whether the company or app has a website, and ensure that any financial disclosures or documents are tailored to the app’s purpose and the proposed financial activity. Ten minutes of researching a company on the internet could save you from losing 10 years of savings.

Treat applications with limited or broken functionality with skepticism. If someone asks you to visit a specific website that hasn’t been verified as legitimate, consider that a red flag.

The FBI encourages financial institutions and consumers 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.