Senator Sherrod Brown (D-OH) – Chairman of the Senate Banking Committee – has sent a letter to the chief executives of Apple and Google demanding a response to fake crypto investing apps circulating in their respective stores.
The App Problem
As the announcement details, the Federal Bureau of Investigation (FBI) warned this month that fake cryptocurrency apps have already stolen $42 million from investors in under a year.
These scams often operate by using stolen logos, brands, and identifying information from other established firms. They then create fake apps and leverage the legitimate company’s reputation to fool investors into providing them with money.
Brown argued that the imperative of steering investors away from such schemes lies upon the crypto industry, but also in the app stores that market them.
“It is likewise imperative that app stores have the proper safeguards in place to prevent against fraudulent mobile application activity,” he said.
The senator has specifically requested that Google and Apple provide a detailed outline of the steps each takes when approving crypto apps on their platforms. It also asked about their processes in reporting fraudulent apps, and the frequency in which they monitor their apps for fraudulent activity.
Brown’s request was announced just ahead of a banking committee hearing pertaining to crypto/security market scams on Thursday. Ahead of the hearing, crypto-friendly senator Pat Toomey released a statement arguing that the Securities and Exchange Commission (SEC)’s “regulation by enforcement” approach has harmed consumers.
Scams During the Bear Market
The crypto winter has ushered in an era of relative peace and safety from cryptocurrency scams, as explained by Chainalysis Director of Research Kim Grauer earlier this month. She said that such fraudulent activity tends to rise and fall with the performance of the market.
However, more sophisticated scams – such as romance scams – are becoming more prevalent. They accounted for $185 million in losses for Americans between January 2021 and March 2022.