The large number of fake cryptocurrency trading apps get attention Federal Bureau of Investigation (FBI). The organization is now issuing warnings to traders saying that they need to do their due diligence before using a crypto investment platform or app so that they do not fall victim to potential scams.
The FBI notices a lot of fake encryption apps
Since the start of 2022, the FBI says, nearly 30 individuals have lost nearly $4 million after they were tricked into putting crypto assets into fake wallet apps. The FBI has also said that many of these apps represent legitimate financial platforms, although whenever people try to withdraw money from their accounts, there are often several barriers preventing them from doing so.
The FBI explained in a statement:
When 13 of the 28 victims tried to withdraw money from the app, they received an email saying that they had to pay taxes on their investment before making withdrawals.
One of the reasons the crypto space has been subject to illicit activity over the years is that it is largely unregulated. While some exchanges engage in know-your-customer (KYC) protocols to make sure their customers are who they say they are, not every company will do background checks on users, which means anyone could fall victim to fraudulent activity if they aren’t careful.
The agency continues to discuss other illicit scenarios, one of which saw more than $5 million stolen from four separate traders using YiBit. After investing their money, they were told that they had to pay taxes on their investment. Even though they did, they were still denied access to their money.
In addition, one of the victims lost close to a million dollars from Supayos also known as Supay, an application that used the name of the Australian currency exchange as a means of real visibility for customers. The client was told that $900,000 is the minimum required to participate and start investing. When the client said “no,” the company responded by threatening to freeze his assets if he did not make the necessary payment.
Crypto crime isn’t huge, but it’s important
Blockchain analysis firm Chainalysis says crypto crime trends for 2022 show that, by value, malicious cryptocurrency activity is at its highest point, yet still represents a very small portion of the overall activity in the space.
Last February, the FBI announced that it had created a new division entirely dedicated to ending digital currency fraud. Known as the Virtual Asset Exploitation Unit, the division is headed by Eun Young Choi, the former assistant US attorney general in Manhattan who eventually helped deliver a 12-year prison sentence to a Russian national who participated in a hacking campaign targeting several financial companies. Institutions including JPMorgan Chase.
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