Google sues app developer over fake cryptocurrency investing app scam

ReportApril 8, 2024Editorial DepartmentInvestment Scam/Action Security

Google has filed a lawsuit against two app developers, accusing them of participating in an “international online consumer investment fraud scheme” that deceived users into downloading fake Android apps from the Google Play Store and other sources with the promise of higher returns as a cover to steal their funds.

The men are Sun Yunfeng, also known as Alphonse Sun, and Zhang Hongnan, also known as Zhang Hongning or Stanford Fisher, who are believed to live in Shenzhen and Hong Kong respectively.

It is alleged that since at least 2019, the defendants have uploaded approximately 87 encrypted applications to the Play Store to conduct social engineering scams, which have been downloaded by more than 100,000 users and resulted in huge financial losses.

“The revenue generated by these apps is illusory,” the tech giant said in its complaint. “And the scheme does not end there.”

“Instead, when individual victims attempted to withdraw their balances, the defendants and their associates doubled down on the scheme, requiring the victims to pay various fees and other payments that were allegedly used by the victims to recoup their principal investments and alleged Necessary for revenue.”

While this scam is often referred to as “pig killing” (also known as “shā zhū pán”), Google says it “neither adopts nor endorses the use of this term.” It stems from the idea that victims are fattened like pigs with the promise of huge returns and then “slaughtered” for their assets.

In September 2023, the U.S. Financial Crimes Enforcement Network (FinCEN) said the scams were perpetrated by criminal enterprises based in Southeast Asia that employed hundreds of thousands of people trafficked into the region and promised them well-paying jobs .

This scheme involves scammers using carefully crafted fictional personas to target unsuspecting individuals through social media or dating platforms, luring them with the prospect of a romantic relationship, building trust, and convincing them to invest in a cryptocurrency portfolio. These portfolios are designed to provide high profits in a short period of time with the aim of stealing their funds.

To create the illusion of legitimacy, financially motivated actors create fake websites and mobile apps to showcase fake investment portfolios with high returns.

Google said Sun and Zhang used Google Voice to trick victim investors into downloading their fraudulent apps via text messages, targeting victims in the United States and Canada. Other distribution methods include affiliate marketing campaigns that offer commissions for “signing up more users” and YouTube videos promoting fake investment platforms.

The company described the malicious activity as persistent and ongoing, with the defendants “using disparate computer network infrastructure and accounts to obfuscate their identities and making material misrepresentations to Google in the process.”

It also accuses them of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), committing wire fraud, and violating the Google Play App Signing Terms of Service, Developer Program Policies, YouTube Community Guidelines, and Google Voice Acceptable Use Policy.

“Only when users have confidence in the integrity of their apps can Google Play continue to be the app distribution platform that users want to use,” Google added. “The defendants used Google Play to conduct fraudulent schemes that threatened the integrity of Google Play. and user experience.”

It’s worth noting that this problem is not limited to the Android ecosystem, as previous reports have shown that such fake apps have also appeared in the Apple App Store multiple times.

The development is the latest in a series of legal actions Google has taken to prevent its products from being misused. In November 2023, the company sued multiple individuals in India and Vietnam for distributing fake Bard AI chatbots (now renamed Gemini) to spread malware through Facebook.