Google has initiated legal proceedings against a cadre of individuals accused of executing a sophisticated crypto scam, as CNBC reports exclusively today. The lawsuit, lodged on Thursday in the Southern District of New York, targets Yunfeng Sun, also known as Alphonse Sun, and Hongnam Cheung, known alternately as Zhang Hongnim or Stanford Fischer, alongside their associates. This legal action represents Google’s pioneering effort among technology companies to judicially confront the menace of crypto fraud, aiming to establish a precedent for user protection on digital platforms.
Google Takes Action Against Crypto Fraudsters
Allegedly operational since at least 2019, the defendants are accused of crafting and disseminating over 87 counterfeit applications through Google Play, hoodwinking upwards of 100,000 global users. The applications, feigning to be legitimate investment and crypto exchange platforms, served as conduits for a grand deceit, employing tactics including, but not limited to, deceptive text message campaigns via Google Voice, promotional endeavors on YouTube and other media, as well as affiliate marketing strategies to ensnare victims.
Halimah DeLaine Prado, Google’s general counsel, in an exclusive interview with CNBC Crypto World, articulated the gravity of the situation, highlighting the over one billion dollars lost to cryptocurrency fraud and scams in the US alone during 2023. Prado emphasized the litigation not only as a defensive measure but also as a deterrent:
This is a unique opportunity for us to use our resources to actually combat bad actors…to not only use our resources to protect users but to also serve as sort of a precedent to future bad actors that we don’t tolerate this behavior.
The scammers’ modus operandi involved masquerading the fraudulent apps as legitimate by displaying fictitious balances and returns on investments, coupled with strategies to initially permit minor withdrawals to build trust. Victims, lured under the guise of profitable investment opportunities, found themselves unable to recoup their investments or the promised returns, often being conned into further payments under the pretense of withdrawal fees or minimum balance requirements.
A particularly egregious example cited in the lawsuit was the TionRT app, purportedly a crypto exchange platform uploaded to Play in 2022 by an account linked to Sun. The scammers utilized various communication platforms to lure victims with the promise of financial gain, subsequently leaving them high and dry when withdrawal attempts were made.
Google’s response to the scam was multifaceted, involving not only the removal of the malicious apps upon discovery but also the deployment of a dedicated cybersecurity team to proactively identify and neutralize threats across its services.
The company’s lawsuit seeks damages exceeding $75,000, attributed to investigative expenditures and resources allocated to maintaining platform safety and integrity. Additionally, Google is pursuing a permanent injunction to bar the defendants and their associates from creating Google accounts or accessing its services henceforth.
At press time, the leading cryptocurrency Bitcoin traded at $66,752.
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