App developer Ryan Ramminger and Equiliv Investments settled for $50,000 with the U.S. Federal Trade Commission (FTC) and the New Jersey Attorney General after charges of creating an app that tricks consumers into installing malware into their smartphones capable of mining second-tier cryptocurrencies such as Litecoin, Quarkcoin and Dogecoin.

Ohio-based Equiliv Investments and Ramminger launched the app Prized in February 2014 for the Amazon App Store, Google Play Store and other online sources, with the promise that customers will earn points for downloading associated apps or playing games and the points could be exchanged for real items, such as gift cards, clothes and other items. Prized was also falsely advertised to be without any malicious software, spyware or viruses, according to the filed complaint.

"Hijacking consumers' mobile devices with malware to mine virtual currency isn't just deplorable; it's also illegal. These scammers are now prohibited from trying such a scheme again," said Jessica Rich, director of the FTC's Bureau of Consumer Protection.

Governments do not support cryptocurrencies such as Dogecoin and Litecoin, though a mining process, which involves computers solving complex mathematical equations, could generate these virtual currencies. The defendants tapped on the thousands of consumers' mobile devices computing resources through pool mining with their app to collect cryptocurrencies faster without the customers' knowledge. The pool mining led to the significant downgrade of the victims' electronic devices by draining batteries faster, causing slow charging and racking up additional data consumption on the mobile monthly plans of the subscribers.

"Consumers downloaded this app thinking that at the very worst it would not be as useful or entertaining as advertised. Instead, the app allegedly turned out to be a Trojan horse for intrusive, invasive malware that was potentially damaging to expensive smartphones and other mobile devices," added Acting New Jersey Attorney General John J. Hoffman.

The settlement requires the offenders to destroy any data accumulated through marketing and app distribution. The court also banned Equiliv Investments and Ramminger from distributing any misleading app that rewards points or prizes to customers. Upon payment of $5,200 to the New Jersey regulators, the remaining balance of $44,800 will be postponed within three years if Ramminger complies with the agreed provisions, according to the agency's press release Monday.

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