The rollercoaster ride 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, targeting U.S. cryptocurrency investors directly, “pretending to offer legitimate cryptocurrency investment services and convincing investors to download fraudulent mobile apps, which cybercriminals have used with increasing success over time to lure investors.” of their cryptocurrency,” according to the private sector notification released last week by the FBI Cyber Division.
The FBI has reportedly identified 244 victims who have lost a total of $42.7 million to the scams in recent months, according to the notice, which specifically targeted U.S. financial institutions and customers, “who suspect they have scammed through fake cryptocurrency investment apps”.
Cyber criminals threaten to create fraudulent cryptocurrency investment apps to exploit legitimate cryptocurrency investments, defraud U.S. investors and damage the reputation of U.S. investment companies.
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 investments. … The FBI has observed that cybercriminals use legitimate USBUS names, logos and other identifying information, including creating fake websites with that information, as part of their ruse to convince investors.
Indeed, given the growing popularity and ubiquity of cryptocurrency investments and rapid changes in valuations, crypto scams are more common than ever, according to a late June report from the Sift fraud prevention firm. 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 asking them to participate in fake crypto exchanges.
At the root of many of these crypto scams is “misleading or fraudulent content,” especially posted on social media, unwitting investors have fallen for these increasingly sophisticated bogus 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 view social media as the “most dangerous source” of false information. .
Fake App Names Closely Associated With Legitimate Crypto Exchanges
Not only do these attacks become more frequent and sophisticated, but fraudsters also use legitimate apps and financial concerns along with false information to steal more and more money from their victims. individual scams. Between December 22, 2021 and May 7, 2022, the FBI found that “unidentified cybercriminals claiming to be a legitimate U.S. financial institution defrauded at least 28 victims out of approximately $3.7 million.”
In this particular scheme, cyber criminals convinced victims to download an app that used the name and logo of a genuine 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 saying they had to pay taxes on their investments before they could withdraw money,” the FBI said in its advisory. “After paying the alleged tax, the victims were unable to withdraw any money.”
And that’s just the tip of the crypto fraud iceberg: Between October 2021 and May 2022, a group called YiBit1 (nearly the same name of a real crypto exchange that closed in 2018) stole about $5.5 million from at least four victims. In November 2021, cybercrime group Supayos (aka Supay2, which is very similar to the name of the legitimate currency exchange in Australia) extracted $900,000 from a victim by convincing the crypto investor that there was a “minimum balance” in the account. be deposited.
As cybercriminals increasingly exploit names or links to legitimate financial and cryptocurrency issues, it has become more difficult for even savvy cryptocurrency investors to tell right from wrong. One-third (33%) of consumers who have experienced payment fraud identified financial services sites 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.