Google is suing two Chinese app developers for allegedly spending years creating fraudulent cryptocurrency investment apps downloaded from the Play Store.
According to a complaint filed with Google earlier this week, Yunfeng Sun (also known as Alphonse Sun) and Hongnam Cheung (also known as Zhang Honnim and Stanford Fisher), residents of Shenzhen and Hong Kong, respectively, were arrested from 2014 to 2019. During that time, he developed 87 fraudulent apps that caused at least financial damage. Around 100,000 people worldwide, the tech giant claims.
Sun and Cheung's apps bill themselves as either crypto exchanges or crypto investment platforms, both of which promise strong returns on investment. Their approach has changed slightly from app to app, but what the tech giants argue through their lawsuits is that the underlying crime hasn't changed.
Victims deposited real money into these apps and their balances appeared to increase or decrease in response to fluctuations in real-world cryptocurrency exchange rates, but the effect was “illusory,” according to the Southern District of New York filing. In the complaint filed [PDF] claims.
“Fraudsters often promise high returns on investments and may provide victims with false reports that the investments are profitable, even if the victim attempts to withdraw their funds. , cannot be withdrawn.”
Sun and Cheung instead allegedly withdrew all deposits after deposits and prohibited victims from withdrawing amounts believed to be their account balances. This is after allowing small withdrawals in the initial stage.
The indictment alleges that they then redoubled their fraudulent activity and demanded additional funds, such as further investments, taxes, and various other fees, in exchange for access to the victims' accounts.
“However, no matter how much money the victim hands over, no matter how many promises the scammer makes, the moment the victim 'invests' that money, the money is gone,” the complaint states. is written.
In addition to developing the app, the two allegedly engaged in various marketing campaigns to promote the scam and also engaged in social engineering to get victims to download and sign up for the app.
Court documents detail the text message campaign, alleging that app developers use Google Voice to send messages such as “I'm Sophia, remember me?” – Attempts to get a response from the victim that the phone number is incorrect.
From there, the scammers start conversations and move them to other messaging platforms, such as WhatsApp, according to the complaint. They then develop a friendship or romantic relationship, build some trust, and then try to “lead” you to an “investment opportunity.”
Screenshot of paid video promotion of fraudulent cryptocurrency investment app by Sun and Cheung
Google's lawyers allege in the document that Sun and Cheung paid actors to appear as the apparent leader team in an online video promoting the fraudulent app. They were allegedly pushing messages that the app was safe and offered great profits.
The filing describes an affiliate marketing campaign used to get victims to download and use the app. Targets were allegedly lured into a fake affiliate campaign where they could earn commissions by signing up as new members. The scammers even discussed holding in-person meetings to provide investment advice, the filing alleges.
Google claims that, through an alleged multi-year criminal process, the pair accessed the Play Store, Google Voice, Google Workspace (to create Google accounts), Gmail, and YouTube (where some of the videos have been made public). The company announced that it had misused many of its services, including: ad was hosted).
The tech giant filed claims under the Racketeering Organizations (RICO) Act and breach of contract related to various of its services. The company is seeking an injunction barring Sun, Cheung, and their employees from ever accessing Google services again.
Google general counsel Halima Delaine Prado told CNBC that the Alphabet-owned company believes this is the first time a technology company has taken legal action against crypto fraudsters.
Approximately 100,000 Google users, including 8,700 in the United States, have suffered financial harm as a result of Sun and Cheung's alleged activities, although the lawsuit does not mention an estimated total amount. However, losses for victims are said to range from a few thousand US dollars to $75,000.
Google also said it suffered more than $75,000 in damages, including costs associated with investigating the pair and resources spent to repair the security and integrity of its platform.
The action taken by Google this week coincides with news that investment fraud is now the top cybercrime in the United States in terms of financial loss.
According to the FBI, losses incurred from cryptocurrency scams like Sun and Cheung's far exceed those associated with ransomware attacks.
The FBI has issued a warning about the rise in cryptocurrency fraud as early as March 2023. The details provided by the federal government seem to read straight from Google's lawsuit.
Social engineering is often involved. check. Romance scams can also have an impact. check. Victims were forced to pay more money to recover lost funds. check.
If true, Sun and Chan's alleged crimes appear to have followed the plan of a cryptocurrency fraudster. ®
