FBI warns about fake cryptocurrency investment apps used to steal millions
Image: Executium (source), The Record (editing)
Andrea Peterson July 18, 2022

FBI warns about fake cryptocurrency investment apps used to steal millions

Andrea Peterson

July 18, 2022

FBI warns about fake cryptocurrency investment apps used to steal millions

Scammers have used fraudulent cryptocurrency investment apps to steal an estimated $42.7 million from at least 244 victims, the FBI warned investors and financial institutions Monday. 

The warning comes after a collapse in the general cryptocurrency market and new reporting on schemes that lure investors into what they think are legitimate online relationships before ripping them off via fake cryptocurrency apps. The warning, which came in the form of a Private Industry Notification released by the FBI’s Cyber Division, lists recommendations for investors and financial institutions for avoiding the schemes and cites specific examples.

In one scheme uncovered by the FBI, unidentified digital fraudsters hijacked the name and logo of a U.S. financial institution to convince them to download a fake app and deposit their cryptocurrency. In that scam — which ran between December 2012 and May of this year — 13 of 28 victims also paid additional supposed “tax” when attempting to get their funds out, but “remained unable to withdraw” it.

Another scam, operating under the name “YitBit1,” pulled a similar fake tax scheme while defrauding at least four victims of some $5.5 million with a fraudulent crypto investment app between October 2021 and May 2022, according to the warning.

The agency issued a public warning last September about a rise in cyberfraud schemes that start on dating sites or social media, building intimacy before “persuading individuals to send money to allegedly invest or trade cryptocurrency.” 

Such schemes are also known as “pig-butchering,” from the Chinese “Shāzhūpán,” — referring to the long game of feeding victims elaborate scripts before trying to take them for as much as possible. A recent report from Vice News highlighted how such operations have professionalized in parts of Southeast Asia in recent years. 

The schemes now rely on human trafficking and local people caught in dire economic circumstances due to the decline of tourism during the pandemic to run call center-style operations, Vice reported. The operations lure victims to hoax cryptocurrency apps at scale, at times draining their life savings.

Andrea (they/them) is senior policy correspondent at The Record and a longtime cybersecurity journalist who cut their teeth covering technology policy ThinkProgress (RIP), then The Washington Post from 2013 through 2016, before doing deep dive public records investigations at the Project on Government Oversight and American Oversight. Their work has also been published at Slate, Politico, The Daily Beast, Ars Technica, Protocol, and other outlets. Peterson also produces independent creative projects under their Plain Great Productions brand and can generally be found online as kansasalps.