Last week, the FBI released an alert warning financial institutions and investors about how cybercriminals are creating fraudulent cryptocurrency investment applications to steal funds from US investors.
“The FBI has observed cybercriminals contacting US investors, fraudulently claiming to offer legitimate cryptocurrency investment services, 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,” says the FBI.
The recent increase in mobile banking and cryptocurrency investing has made it easier for cybercriminals to find potential targets. To date, the FBI has identified over 244 individuals who have fallen victim to this scam, with an estimated loss of approximately $42.7 million.
Financial institutions and their customers who suspect they have been defrauded through fake cryptocurrency investment apps should contact the FBI via the Internet Crime Complaint Center or their local FBI field office.
To lure potential victims, the bad actors are misusing the logos and names of legitimate financial institutions. According to the FBI, between December 2021 and May 2022, cybercriminals pretending to be a legitimate US financial institution defrauded at least 28 victims of approximately $3.7 million. This number is staggering, considering the average payout per victim is roughly $132,000.
“The cyber criminals convinced victims to download an app that used the name and logo of an actual US financial institution and deposit cryptocurrency into wallets associated with the victims’ accounts on the app. When 13 of the 28 victims attempted to withdraw funds from the app, they received an email stating they had to pay taxes on their investments before making withdrawals. After paying the supposed tax, the victims remained unable to withdraw funds,” said the FBI in the alert released last Monday.
- Proactively warn customers about this activity and provide steps customers can take to report it.
- Inform customers as to whether the financial institution offers cryptocurrency investment services or other related services and methods to identify legitimate communications from the institution to customers.
Inform customers whether the financial institution has a mobile application.
- Periodically conduct online searches for your company’s name, logo, or other information to determine if they are associated with fraudulent or unauthorized activity.
- Be wary of unsolicited requests to download investment applications, especially from individuals you have not met in person or whose identity you have not verified.
- Take steps to verify an individual’s identity before providing them with personal information or relying on their investment advice.
- Verify an app is legitimate before downloading it by confirming the company offering the app actually exists, identifying whether the company or app has a website, and ensuring any financial disclosures or documents are tailored to the app’s purpose and the proposed financial activity.
- Treat applications with limited and/or broken functionality with skepticism.