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Google sues crypto scammers for allegedly uploading fake apps

Google filed a lawsuit Thursday against a group of crypto scammers, alleging they defrauded more than 100,000 people across the world by downloading fraudulent crypto investing and trading apps from Google Play.

Google says it is the first tech company to take action against crypto fraudsters, setting a legal precedent for establishing protections for users. The lawsuit claims the defendants made “multiple false statements to Google in order to upload their fraudulent applications to Google Play, including, but not limited to, misrepresentations about their identity, location, and type and the nature of the downloaded application”.

THE AlphabetThe company-owned company is filing a civil suit under the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as breach of contract claims against the group of scammers, who the company says have created and published at least 87 fraudulent apps to fool users.

“This is a unique opportunity for us to use our resources to combat bad actors who were running a large crypto scheme to defraud some of our users,” Halimah DeLaine Prado, Google general counsel, told CNBC Crypto World in an exclusive interview. camera interview.

“In 2023 alone, we have seen over $1 billion in cryptocurrency fraud and scams in the United States and this (the lawsuit) not only allows us to use our resources to protect users , but also to serve as a precedent to future bad actors that we will not tolerate this behavior,” she added.

The lawsuit, filed in the Southern District of New York, said the alleged scammers, identified as Yunfeng Sun, also known as Alphonse Sun, and Hongnam Cheung, also known as Zhang Hongnim or Stanford Fischer, had been carrying out their scheme since at least 2019. The two allegedly instigated victims to download their apps from Google Play and other sources via three methods: SMS campaigns using Google Voice to victims primarily in the United States and Canada, online promotional videos on YouTube and other platforms, and affiliate marketing campaigns that paid commissions to users for signing up people.

Sun, Cheung and their agents designed the apps to appear legitimate, showing users that they were maintaining their balance on the app and getting a return on their investments, according to the lawsuit. However, users could not withdraw their investments or so-called winnings.

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In an effort to convince users that the apps were trustworthy, the defendants would allow users to initially withdraw small amounts of money, according to the suit. Others were allegedly told they had to pay fees or have a minimum balance to withdraw their money, schemes that Google said “scam some victims out of even more money.”

“Unfortunately, as new technologies emerge, bad actors exploit that technology to try to defraud users,” DeLaine Prado said. “We have teams working around the clock to detect fraud, spam and abuse and when we find a unique case where we can actually take it a step further, we engage in affirmative litigation by filing a lawsuit to create legal protections for our users in a more constructive way.”

One of the apps highlighted in the suit was TionRT, which claimed to be a crypto exchange. Google said the app was uploaded to Play in 2022 by a developer account associated with Sun. Members of the alleged fraud scheme used text messages and social media platforms to trick victims into downloading the app and using it to invest, with the promise of earning additional money, according to the complaint.

TionRT appeared legitimate because of press releases about the app posted on the news services’ websites, according to the suit. According to Google, when victims complained to people who texted them that they could no longer withdraw their money, they did not receive a response. The platform was eventually closed.

Google was alerted to the fake apps by victims, who contacted the company after unsuccessful efforts to withdraw their funds.

“We have a dedicated cybersecurity team that constantly reviews all of our platforms and services to look for opportunities where we can do more or where we believe users are being abused,” DeLaine said Prado. In some cases, Google partners with law enforcement, she added.

Google said in the complaint that when it took the apps offline, the scammers would create new ones and upload them to Google Play, using “various computer network infrastructure and accounts to mask their identities and making false claims to Google in the process. ”

Google claims it suffered damages of more than $75,000 in incurring expenses to investigate the breach and in security and integrity resources. The company seeks a permanent injunction against the defendants for general damages and to prevent them and their employees from creating Google accounts and accessing Google services.

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