Senator Sherrod Brown, chairman of the Senate Banking Committee, has written letters to the CEOs of Google’s parent company, Alphabet and Apple, calling on tech companies to provide information on how they prevent certain apps from promoting scams cryptographic.
According to letters released Thursday, Brown asked Apple CEO Tim Cook and Alphabet CEO Sundar Pichai for steps taken by tech giants in approving crypto apps on Apple and Android devices. The senator asked for information on how companies assess whether apps are “reliable and secure”, prevent possible phishing apps through fraudulent apps, and report these apps to users.
“Cybercriminals stole logos, names, and other identifying information from crypto companies, then created fake mobile apps to trick unsuspecting investors into thinking they were dealing with a legitimate crypto company,” Brown said. “While companies that offer crypto investments and other related services should take the necessary steps to prevent fraudulent activity, including warning investors about the rise of scams, it is also imperative that app stores implement places appropriate safeguards to prevent fraudulent mobile app activity.”
Brown’s letters came after the Federal Bureau of Investigation issue a public warning on fraudulent cryptocurrency apps on July 18. The bureau reported that the crooks stole more than $42 million from 244 people between October 2021 and May 2022, including one case in which an app used the name of a legit old crypto exchange.
Speaking at a Thursday hearing with the Senate Banking Committee on “Understanding Scams and Risks in the Crypto and Securities Markets,” Brown seemed to place some of the burden of fighting crypto scams on platforms and apps on lawmakers and regulators rather than businesses:
“We hear from industry players calling for rules of the road when a big fraud is uncovered and after a big player has knowingly broken the law. The rules are there, the roadmap is clear and [the Senate Banking Committee] must make sure our regulators enforce the law and protect the workers and families who keep this economy going […] Industry should not be allowed to write the rules they want to follow.
Protecting Investors and Savers: Understanding Scams and Risks in the Crypto and Securities Markets
— Senate Banking and Housing Democrats (@SenateBanking) July 28, 2022
Gerri Walsh, Chairman of the Financial Industry Regulatory Authority Investor Education Foundation, said in written testimony for the hearing that part of the $57 million in fines imposed by the financial regulator Robinhood paid trading app in June 2021 would be used to educate crypto investors, including those using online accounts or mobile apps. Walsh also pointed to scammers using dating and messaging apps to trick victims into sending funds or investing in fraudulent crypto platforms and said misinformation on social media was a major factor in the spread of these scams in response to a question on Instagram posts.
The Federal Trade Commission reported in June that about 46,000 people in the United States had lost up to $1 billion in crypto to scams in 2021. The commission said at the time that about half of all crypto-related scams came from social media platforms via ads, posts and messages.
Cointelegraph has contacted Apple and Google, but has not received a response at press time.