Google sues alleged developers of fraudulent crypto investment apps

Google on Thursday filed suit against two developers accused of making fraudulent investment apps and uploading them to the Google Play store. 

Defendants Yunfeng Sun and Hongnam Cheung, who are believed to be based in Shenzhen and Hong Kong respectively, are alleged to have developed and uploaded 87 applications used to conduct cyber fraud. 

According to the suit filed in the Southern District of New York, some of the apps were used for “pig butchering” scams “through which fraudsters contact and socially engineer targets through text messaging or other communication platforms, gain their trust, and ultimately convince them to invest in seemingly legitimate investment platforms.”

The defendants or their “agents” sent messages through Google Voice to people primarily in the United States and Canada purporting to be sent to the wrong number, like: “I miss you all the time, how are your parents Mike?” After apologizing for the mistake, they would attempt to strike up a relationship with the victim before eventually convincing them to download an investment app and depositing funds. 

“When victims attempt to withdraw funds, they cannot do so. The fraudsters frequently respond to attempts to withdraw funds by requesting additional investment, taxes, or fees, promising that these payments will allow victims to access their accounts. But no matter how much money the victim hands over or how many promises the fraudsters make, the moment the victims ‘invest’ the money, it is gone,” the lawsuit alleges. 

The defendants also allegedly created a company in early 2022 targeting Ghanaians called the Starlight Project, even setting up an office in the city of Hohoe. Through Facebook, TikTok, Instagram and at in-person events, the company allegedly encouraged people to download the Starlight app, which claimed that people could earn money just by watching YouTube videos and completing tasks on the application. 

In reality, they were required to deposit money in order to start “earning” and were never able to withdraw their funds. 

According to the lawsuit, Google uses human and “automatic” reviews to prevent deceptive apps in its store but the developers repeatedly tried to get around them. 

“Defendants made multiple misrepresentations to Google in order to upload their fraudulent apps to Google Play, including but not limited to, misrepresentations about their identity, location, and the type and nature of the application being uploaded,” they said. Google alleges that at least 100,000 people downloaded the fraudulent apps from its store. 

The company claims the men violated the Racketeer Influenced and Corrupt Organizations Act (RICO), which targets organized crime. 

Online investment fraud has grown into a billion dollar industry with links to transnational criminal networks. According to the FBI, investment fraud resulted in the loss of $4.57 billion in the U.S. last year, with nearly $4 billion in losses connected to cryptocurrency fraud.