Dive Brief:
- Dallas-based Comerica is accusing an Asian cryptocurrency firm, VRB, of brand infringement after it falsely portrayed the bank as a financial backer and used actors posing as Comerica employees to draw investors into a scam, the bank said in a press release.
- VRB had touted its connection to Comerica as early as June, calling itself "the world's first contract-based cryptocurrency bank" in a press release. BusinessWire, which circulated the release, has since taken it down.
- In its statement, Comerica said its "legal team continues to aggressively pursue takedown of VRB web domains that make reference" to the bank. But videos posted to a VRB-branded Facebook page shows an event, allegedly in Malaysia in late August, featuring backdrops with the logos of VRB, Comerica and Mastercard. Mastercard likewise denies ever being affiliated with VRB.
Dive Insight:
The potential for cryptocurrency to skyrocket in value — for example, Bitcoin climbed from less than $1,000 to $20,000 in 2017 alone — presents an opportunity for scammers to make money.
A report in The Wall Street Journal last year found crypto market manipulation generated $825 million in trading activity over six months. The Journal identified 175 "pump and dump" schemes over the same span involving 121 digital coins. Accusations of market manipulation are common even among legitimate cryptocurrencies. A class of investors sued Tether and its affiliated exchange, Bitfinex, this week over the disappearance of $265 billion in crypto wealth.
In its press release, VRB calls itself "a brand-new species of bank, which has emerged from the collision of a group of technological geeks specializing in blockchain and the more than 150-year-old Comerica Bank from the USA."
VRB's prospectus, seen by American Banker, also claimed Comerica would guarantee refunds to investors if VRB were to fail.
"Those involved with VRB cryptocurrency have sought to use the Comerica brand name to lend their operation legitimacy, and individuals attempting to make that association are not Comerica employees," Comerica said in its Sept. 27 press release.
VRB hosted events in such countries as Malaysia, the Philippines, Vietnam and Japan, where it supposedly used actors pretending to be bank employees, Comerica said.
VRB appears to use similar tactics in a YouTube video of what is meant to be a signing ceremony involving VRB and a Mastercard executive named Howard Charlton, whose title — at least on screen — is "Asia Pacific Operator of Mastercard Incorporated."
Mastercard's corporate website does not list a Howard Charlton, nor does it list anyone with the title of Asia Pacific operator.
"Despite any claims that are being made, Mastercard does not have a relationship with VRB Corporation," a spokesman told American Banker.
VRB's website is no longer live, and attempts to contact the owner of VRB's Facebook pages went unanswered.
"I'm surprised a bank's name would be used in this way because eventually the bank is going to find out and take the necessary actions," Rahul Telang, a professor of information systems at Carnegie Mellon University's Heinz College, told American Banker.
