The FBI Warns Crypto Investors to Watch Out for Fraudulent Apps

The FBI is warning of fraudulent cryptocurrency apps that have stolen millions from investors.

The FBI has issued a warning to the public about phony apps that are swindling cryptocurrency investors out of funds. These apps have stolen almost $43 million from a total of 244 victims in less than a year, all of which are based within the US.

Victims Are Falling for False Claims and Impersonation

The cryptocurrency industry is no stranger to cybercrime, be it rug pulls, phishing, scam tokens, or anything else. The latest wave of scams has come in the form of fake investment apps, wherein attackers will pretend to be well-established investment companies and make false promises in order to trick victims out of their funds.

US investors who have fallen for this scam were initially convinced to download one of these fraudulent apps by the attackers. Then, they would be asked to deposit crypto funds into the wallet they had opened on the app. However, once these funds were deposited, there was no going back.

When an investor attempted to withdraw their funds, or a portion of their funds, from the app wallet, they’d be told that they had to pay a withdrawal charge first. However, even when this charge was paid, the funds would remain permanently inaccessible. Some apps even set a deposit minimum of hundreds of thousands of dollars to rake in as much money as possible in one go.

Phony Apps Are Damaging the Reputations of Others

This wave of crypto app scams is also having a knock-on effect on legitimate organizations.

In an advisory released by the FBI, it was stated that these scams are also “causing reputational harm to US investment firms”. Given that many trusted investment companies now rely on their apps for profit, this wave of attacks may also cause financial damage, as they will likely discourage individuals from using crypto investment apps in general.

Multiple Cases of Large-Scale Fraud Have Been Recorded So Far

Cybercriminals are able to steal huge swathes of cash per scam via these phony investment apps. Just four investors lost a total of $5.5 million through a fraudulent app between October 2021 and May 2022.

Additionally, 28 investors lost $3.7 million in another case between December 2021 and May 2022. Both cases involved attackers persuading victims to both download the fraudulent app and deposit funds. Cybercriminals are able to create incredibly convincing apps that can easily fool users into depositing large sums of money.

This Isn’t the End of Crypto Crime

So far, victims have lost billions of dollars in both crypto and traditional cash via cryptocurrency scams. As attackers develop their skills and use more sophisticated methods, there’s no doubt that we’ll continue to see a rise in cryptocurrency-related cybercrime.