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FBI Warns of Fraudulent Crypto Investment Applications

The Federal Bureau of Investigation (FBI) is warning financial institutions and investors of fraudulent cryptocurrency investment applications used to defraud victims of millions of dollars.

The Federal Bureau of Investigation (FBI) is warning financial institutions and investors of fraudulent cryptocurrency investment applications used to defraud victims of millions of dollars.

An increased interest in mobile banking and cryptocurrency investment has led to the availability of numerous financial applications for legitimate investment, and cybercriminals immediately started taking advantage of potential investors.

Fraudsters claiming to provide crypto investment services were seen contacting investors in the United States and convincing them to install fraudulent mobile apps. The cybercriminals then used these apps to defraud the investors of their cryptocurrency.

According to the FBI, these schemes have made at least 244 victims to date, with the estimated losses surpassing $42 million.

“Cyber criminals are creating fraudulent cryptocurrency investment apps to exploit legitimate cryptocurrency investments, defrauding US investors and causing reputational harm to US investment firms,” the FBI says.

Threat actors were also seen attempting to lure investors with fake websites that were using the names, logos, and other information of legitimate businesses, the Bureau explains.

“Financial institutions should warn their customers about this activity and inform customers as to whether they offer cryptocurrency services,” the FBI notes.

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Between December 2021 and May 2022, a threat actor posing as a legitimate US financial institution tricked at least 28 victims into downloading an application that used the identifying information of the actual institution.

Victims were instructed to deposit cryptocurrency into accounts associated with the application but, when they attempted to withdraw funds, they were told they had to pay taxes on their investments. However, victims were unable to access their funds even after paying the supposed tax.

The cybercriminals behind this scheme defrauded their victims of approximately $3.7 million, the FBI says.

Between October 2021 and May 2022, threat actors operating a company named YiBit defrauded at least four victims of roughly $5.5 million. After downloading the YiBit app and using it to deposit cryptocurrency, victims were told they had to pay taxes, but were unable to withdraw their funds.

In November 2021, cybercriminals operating a company named Supayos, or Supay, defrauded at least two victims who downloaded the company’s app and used it to deposit cryptocurrency.

One victim was told they were enrolled in a program that required a minimum balance of $900,000, without their consent. When the victim attempted to cancel the subscription, they were told their assets would be frozen unless they deposited the requested funds.

To prevent similar incidents, the FBI encourages financial institutions to proactively warn customers of such fraudulent activities, to inform customers if they offer cryptocurrency investment services or if they have a mobile application, and to periodically search the internet for potentially fraudulent use of their name, logo, and other information.

Investors, on the other hand, should be wary of unsolicited requests to install investment applications, to verify the legitimacy of applications before downloading and installing them, and to be skeptical of applications that have limited or broken functionality.

Related: FBI Warns of ‘Reverse’ Instant Payments Phishing Schemes

Related: FBI Warns of BEC Scams Abusing Virtual Meeting Platforms

Related: FBI: Scams Involving Cryptocurrency ATMs and QR Codes on the Rise

Written By

Ionut Arghire is an international correspondent for SecurityWeek.

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