The Federal Bureau of Investigation (FBI) has identified yet another crypto-related financial threat to US investors. The latest report published by the bureau highlighted the recently increased prevalence of fraudulent cryptocurrency investment applications to defraud investors.
The FBI alerted investors about scammers who are claiming to offer legitimate crypto currency investment services using the names of established institutions, coercing victims to install their fraudulent mobile apps. Following this, the agency determined that so far they have “identified 244 victims and estimates the approximate loss associated with this activity to be $42.7 million”. Subsequently, the FBI sought future victims or witnesses to contact them via the Internet Crime Complaint Center or their local FBI field office.
How Can Institutions Prevent Crypto Fraud?
The FBI provided a set of recommendations to both financial institutions and crypto investors in an attempt to dodge these scams. For financial institutions, the bureau suggested that the organizations must “proactively warn customers about this activity and provide steps customers can take to report it”, along with clearly ascertaining whether they offer crypto investment services or other related services and methods to “identify legitimate communications from the institution to customers”.
Additionally, established institutions are also recommended to inform their users if they already have a mobile application or plan to launch one in near future. At last, these reputable financial firms are expected to “periodically conduct online searches for your company’s name, logo, or other information to determine if they are associated with fraudulent or unauthorized crypto activity”.
Investors’ Guide to Dodge Scams
To prevent investors from getting scammed, the FBI first and foremost suggested to “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”. Following this, the agency advocated the “don’t trust, verify” approach, noting that crypto investors must “verify an individual’s identity before providing them with personal information or relying on their investment advice” by — determining whether an crypto app is legitimate before installation.
This can be done by simply confirming if the company offering the app “actually exists”, along with “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”. Ultimately, given the heightened rate of crypto scams, investors should pose certain skepticism toward apps with limited and/or broken functionality.