Google on Thursday filed a lawsuit against a group of cryptocurrency scammers, accusing them of defrauding more than 100,000 people around the world by uploading fraudulent investment and cryptocurrency trading apps to Google Play.
Google said it was the first tech company to take action against cryptocurrency scammers and did so to establish a legal precedent and provide protection for users. The lawsuit alleges that the defendants “made multiple misrepresentations to Google in order to upload their fraudulent applications to Google Play, including, but not limited to, misrepresentations about their identity, location, and the type and nature of the applications they uploaded.” .
this letterThe company is filing civil claims under the Racketeer Influenced and Corrupt Organizations (RICO) Act and a breach of contract claim against the fraud ring, which it says created and released at least 87 fraudulent apps to trick users.
“This is a unique opportunity for us to use our resources to actually combat bad actors who are running widespread cryptocurrency schemes to defraud some of our users,” Halima Deleon PradoGoogle’s general counsel said in an exclusive camera interview with CNBC Crypto World.
“In 2023 alone, we saw over $1 billion in cryptocurrency scams and scams in the United States, and this (lawsuit) allows us to use our resources to not only protect users, but also to protect our future bad actors. The perpetrators set a precedent. Do not tolerate this behavior,” she added.
The lawsuit was filed in the Southern District of New York, The alleged scammers, Yunfeng Sun (aka Alphonse Sun) and Hongnam Cheung (aka Zhang Hongnim or Stanley Fischer), were said to have been carrying out their scheme since at least 2019. The pair allegedly tricked victims into downloading their app from Google Play and then disseminated the information to other sources in three ways: using Google Voice to send text message campaigns to victims primarily in the United States and Canada, YouTube and other platforms online promotional videos on , as well as affiliate marketing campaigns that pay commissions to registered users.
The lawsuit alleges that Sun, Zhang and their agents designed the apps to appear legitimate, showing users that they were maintaining balances on the apps and earning a return on their investments. However, users cannot withdraw their investments or claimed profits.
To convince users that the apps were trustworthy, the defendants would allow users to initially withdraw small amounts of money, the lawsuit alleges. Others were allegedly told they needed to pay fees or reach a minimum balance to withdraw funds, a tactic Google said “defrauded some victims of more money.”
“Unfortunately, as new technologies emerge, bad actors will exploit the technology to defraud users,” Delaine Prado said. “Our teams work around the clock to detect fraud, spam, and abuse, and when we find a unique instance, we can actually go a step further and we’ll actually engage in affirmative action, file lawsuits, and actually create The law protects our users in a more constructive way.”
One app highlighted in the lawsuit is TionRT, which claims to be a cryptocurrency exchange. Google said the app was uploaded to Play in 2022 by a developer account associated with Sun. According to the indictment, members of the alleged fraudulent scheme used text messages and social media platforms to lure victims into downloading the app and investing it with the promise of making extra money.
The lawsuit alleges that TionRT appeared to be legitimate because news about the app was posted on the newswire service’s website. According to Google, when victims complain to the texter about their subsequent inability to withdraw funds, they don’t get a response. The platform was eventually shut down.
Google was alerted about the fake app by victims who contacted the company after failing to withdraw funds.
“We have a dedicated cybersecurity team that constantly looks at all of our platforms and services to look for opportunities where we can do more or where we think our users are being abused,” Delaine Prado said. She added that in some cases, Google would cooperate with law enforcement.
Google said in the complaint that when apps are offline, scammers create new apps and upload them to Google Play, using “different computer network infrastructure and accounts to obfuscate their identities, and in the process Made material misrepresentations to Google.”
Google claims it suffered more than $75,000 in damages due to the cost of investigating the breach and the cost of security and integrity resources. The company is seeking a permanent injunction against the defendants for general damages and to prevent them and their employees from setting up Google accounts and accessing Google services.
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