Senator Sherrod Brown urged American politicians and authorities to handle cryptocurrency frauds, saying “industry shouldn’t be permitted to set the rules that they want to play by.”
Senator Sherrod Brown, leader of the Senate Banking Committee, has written letters to the CEOs of Apple and Alphabet, the parent company of Google, requesting details on how the tech companies prevent some applications from promoting cryptocurrency frauds.
In the letters that were made public on Thursday, Brown reportedly inquired about the actions that Alphabet CEO Sundar Pichai and Apple CEO Tim Cook were doing to approve cryptocurrency apps for use on Apple and Android devices.
The senator asked for details on how the businesses determined if applications were “reliable and safe,” prevented potential phishing apps through false apps, and alerted users to such apps.
According to Brown, “cybercriminals have stolen corporate logos, names, and other identifying information from cryptocurrency organizations and then constructed bogus mobile applications to deceive unwary investors into thinking they are doing business with a real crypto firm.” “While companies that provide cryptocurrency investment and other related services should take the necessary precautions to prevent fraudulent activity, including alerting investors to the rise in scams, it is equally important that app stores have the necessary safeguards in place to guard against fraudulent mobile application activity,” the report stated.
Brown’s letters came after the Federal Bureau of Investigation on July 18 released a public alert about phony cryptocurrency apps. Between October 2021 and May 2022, fraudsters stole more than $42 million from 244 victims, according to the FBI. One instance used an app that used the name of a once-reliable crypto exchange.
Brown appeared to lay part of the responsibility for tackling crypto scams on platforms and applications on politicians and regulators rather than businesses while speaking at a hearing with the Senate Banking Committee on Thursday about “Understanding Scams & Risks in Crypto and Securities Markets”:
“We hear industry players call for rules of the road when a big fraud is uncovered, and after a big actor has knowingly violated the law. The rules are there, the roadmap is clear, and [the Senate Banking Committee] needs to make sure our regulators enforce the law and protect the workers and families that keep this economy rolling […] Industry shouldn’t be allowed to write the rules that they want to play by.”
A portion of the $57 million in fines the financial regulator levied against trading app Robinhood in June 2021, according to Gerri Walsh, president of the Financial Industry Regulatory Authority Investor Education Foundation, will go toward educating crypto investors, including those who use online accounts or mobile apps. Walsh also mentioned fraudsters utilizing messaging and dating apps to trick victims into sending money or investing in phony cryptocurrency platforms, and in answer to a query about Instagram postings, she said that disinformation on social media was a key component in the spread of such scams.
In June, the Federal Trade Commission revealed that over 46,000 Americans have lost up to $1 billion in cryptocurrency as a result of frauds in 2021.
At the time, the commission stated that social media platforms through advertisements, postings, and messages were the source of around half of all cryptocurrency-related frauds.