The high number of fake crypto trading apps has earned the attention of the Federal Bureau of Investigation (FBI). The organization is now issuing warnings to traders saying they need to do their due diligence before utilizing a crypto investing platform or application so that they don’t fall victim to potential scams.
The FBI Is Noticing a Lot of Fake Crypto Apps
The FBI says since the beginning of 2022, nearly 30 separate individuals have lost close to $4 million after they were duped into placing crypto assets in fake wallet apps. The FBI also said many of these applications posed as legitimate financial platforms, though whenever people tried to take their money out of their accounts, there were often several barricades in place that prevented them from doing so.
In a statement, the FBI explained:
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.
One of the reasons the crypto space has been so subjected to illicit activity over the years is because it’s largely unregulated. While some exchanges engage in know your customer (KYC) protocols to ensure their customers are who they say they are, not every company is going to check on users’ backgrounds, meaning anyone could fall victim to fraudulent activity if they are not careful.
The agency goes on to discuss other illicit scenarios, one of which saw more than $5 million stolen from four separate traders using the YiBit app. After investing their funds, they were informed they needed to pay taxes on their investments. Despite doing so, they were still prevented from accessing their money.
In addition, one victim lost close to $1 million from Supayos aka Supay, an app that utilized the name of an Australian currency exchange as a means of appearing real to customers. The customer was told that $900,000 was the minimum requirement to get involved and begin investing. When the customer said “no,” the company retorted by threatening to freeze his assets if he didn’t make the necessary payment.
Crypto Crime Isn’t Huge, but It’s Significant
Blockchain analysis firm Chainalysis says crypto crime trends for 2022 show that in terms of value, malicious digital currency activity is at its highest point, yet it still accounts for a very small portion of the overall activity in the space.
Last February, the FBI announced it had established a new division devoted entirely to ending digital currency fraud. Known as the Virtual Asset Exploitation Unit, the division is headed by Eun Young Choi, a former assistant U.S. attorney in Manhattan that ultimately helped hand down a 12-year prison sentence to a Russian citizen who took part in a hacking campaign that targeted several financial institutions including JPMorgan Chase.
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