The FBI is warning crypto investors to be on the lookout for fake apps that have defrauded over $42 million from users

• The FBI warned crypto investors of fake apps, which scammed over $42 million from users since October.
• Fraudulent apps were often masquerading under the names of legitimate crypto platforms, the warning said.

The FBI issued a warning Monday for investors to be wary of fake apps in the cryptocurrency space, which defrauded over $42 million from users since October of last year.

The fake apps often ask users to deposit cryptocurrency before locking them out of their accounts. The FBI has tallied 244 such victims and singled out several apps for alleged fraudulent behavior.

For example, scammers using the name YiBit asked users to deposit and pay taxes on cryptocurrency before blocking customers from withdrawing their funds. Another fake app going by the name Supay sought a user's funds then froze them, claiming a minimum balance of $900,000 was required.

The agency noted that fraudsters were using the popularity of online crypto banking to scam users, and were often masquerading under names of legitimate crypto companies. YiBit went by the name of a formerly legitimate crypto exchange that ended its operations in 2018, and Supay took its name from a legitimate Australian exchange, the FBI said.

The FBI urged crypto investors to do research on companies that offer cryptocurrency services and to verify a company's identity before handing over personal information.

The decentralized and largely unregulated crypto space has a reputation for being a petri dish of financial crime, causing the SEC to double its crypto and cyber crime unit earlier this year.

The Federal Trade Commission has also flashed warnings, reporting that investors had lost over $1 billion to fraudsters since the beginning of 2021.

Policymakers have previously urged Congress to step in, and Senator Elizabeth Warren told Yahoo Finance last week: "Too many crypto firms have been able to scam customers and leave ordinary investors holding the bag while insiders make off with their money."