Google has filed a lawsuit against two Chinese app developers, claiming they spent years creating fraudulent cryptocurrency investing apps downloaded from its Play Store.
According to a complaint filed by Google earlier this week, Yunfeng Sun, AKA Alphonse Sun, Hongnam Cheung, AKA Zhang Hongnim, and Stanford Fischer, from Shenzhen and Hong Kong, respectively, developed 87 fraudulent apps between 2014 and 2019, causing at least 100 million dollars in financial damage. A thousand people around the world, or so the tech giant claims.
Sun and Cheung's apps are claimed to be either cryptocurrency exchanges or cryptocurrency investment platforms, all of which promise great returns on investment. Their methods have changed slightly with each application, but what the tech giant claims through its lawsuit is that the underlying crime has remained the same.
Victims deposit real money into these apps that may appear to show balances that rise and fall in line with real-world cryptocurrency exchange rate fluctuations, but the effects were “illusory,” the complaint filed in the Southern District of New York says. [PDF] Allegedly.
“Often, scammers guarantee that investments will yield high returns, and may present victims with fabricated reports that falsely portray their investments as making money. When victims try to withdraw money, they are unable to do so.”
It is alleged that Sun and Cheung would instead withdraw all deposits after they were made, preventing victims from withdrawing what they believed were their account balances. This is after allowing them to withdraw small amounts in the early stages.
They would then double down on their scam, demanding additional money for things like more investments, taxes and various other fees in exchange for access to victims' accounts, the complaint alleges.
“But no matter how much money the victim hands over or how many promises the scammers make, the moment victims invest the money, it's gone,” the lawsuit said.
In addition to developing the apps, the pair allegedly engaged in various marketing campaigns to promote the scams, and also socially engineered victims to download and sign up for them.
Court documents detailed the alleged text messaging campaigns, alleging that the app's developers would use Google Voice to send messages like: “I'm Sofia, do you remember me?” – Trying to get a response from victims saying they got the wrong number.
From there, the complaint claims, the scammers will initiate conversations and move them to other messaging platforms like WhatsApp. Later, they will try to establish friendships and romantic relationships, building a degree of trust, before being 'guided' through an 'investment opportunity'.
Screenshot of Sun and Chung's alleged paid video promotion of a fraudulent cryptocurrency investment app
Google lawyers allege in the document that Sun and Chung also paid the actors to pose as visible driving teams appearing in online videos that promoted their scam apps. They allegedly send a message that the apps are safe and will provide strong returns.
The file describes affiliate marketing campaigns used to induce victims to download and engage with the apps. The targets were allegedly recruited into fake affiliate campaigns in which they could earn a commission in exchange for signing up new members. The scammers even talked about holding an in-person conference to provide investment advice, the filing claims.
During the alleged multi-year criminal operation, Google says the pair abused several of its services, including the Play Store, Google Voice, Google Workspace (to create their Google accounts), Gmail, and YouTube (where some of the videos are shown). Ads hosted).
The tech giant has filed suits under the Racketeer Influenced and Corrupt Organizations (RICO) Act and for contract violations related to its various services. The company is seeking an injunction to prevent Sun, Chung and their employees from accessing Google services again.
Halima Delin Prado, general counsel at Google, told CNBC that the Alphabet-owned company believes this is the first time a technology company has taken legal action against cryptocurrency scammers.
Although about 100,000 Google users, including 8,700 in the United States, have suffered financial damages as a result of Sun and Cheung's alleged activity, the lawsuit does not give any estimated total amounts. However, the victims' losses are said to have ranged from a few thousand US dollars to $75,000.
Google also says it suffered damages of more than $75,000, including costs associated with investigating the couple and resources spent addressing the safety and integrity of its platforms.
Google's action this week coincides with news that investment fraud is now the top form of cybercrime in the United States in terms of financial loss.
According to the FBI, losses incurred from cryptocurrency scams like those carried out by Sun and Cheung allegedly far exceed those related to ransomware attacks.
The FBI issued a warning about the rise in cryptocurrency scams as early as March 2023. The details provided by the feds almost sound as if they were reading Google's lawsuit literally.
Social engineering is often involved. Checks. Sometimes romance scams come into play. Checks. Victims were left stranded and forced to pay more money to get their lost money back. Checks.
If true, the alleged crimes committed by Sun and Cheung apparently followed the playbook of cryptocurrency scammers. ®
