New York Attorney General Letitia James has frozen
$300,000 worth of cryptocurrency linked to an international fraud scheme that
targeted hundreds of Russian-speaking residents across Brooklyn and beyond.
Authorities say the operation used deceptive social
media ads to lure victims into fake crypto investment platforms, resulting in
more than $1 million in losses in Brooklyn alone.
Facebook Ads and Fake Platforms Fueled the Scam
The investigation, conducted by the Attorney General’s
Office, the Brooklyn District Attorney, and the New York Department of
Financial Services (DFS), found that scammers based in Vietnam used
Russian-language Facebook ads to promote what appeared to be legitimate crypto trading opportunities.
The ads directed victims to fraudulent platforms where
they were encouraged to invest increasing amounts of money.
After making initial deposits, victims were shown
fabricated account growth and asked to pay additional sums under the guise of
taxes or withdrawal fees. Eventually, the scammers cut off communication,
locking victims out of their funds.
Meta, the parent company of Facebook, shut down more
than 700 accounts linked to the advertising campaign after being alerted by
authorities.
Read more: Coinbase Seeks Approval to Use USDC as Collateral in Regulated Futures Markets
“As crypto scams continue to proliferate, it is
crucial for law enforcement agencies to work together in order to stop them,”
said Brooklyn District Attorney Eric Gonzalez.
“That’s what happened in this case, with the
fraudulent network being shut down, victims warned to stop investing, and some
of the stolen money getting recovered.”
Over 300 Victims Identified
According to officials, more than 300 individuals were
affected by the scam. Investigators contacted many of the victims
directly, warning them before additional funds were sent. In some cases,
authorities successfully prevented further losses.
The scam was first detected in October 2024, when DFS
identified a website falsely displaying a BitLicense certificate. BitLicenses
are issued by the state to ensure compliance in virtual currency businesses.
The fraudulent site—WhalesTrade.com—reportedly led investigators to a larger network of
related websites and accounts.
To avoid detection on Facebook and conceal their
identities, the scammers paid a Vietnamese individual for “Black Hat”
advertising services, a term used for deceptive ad practices that violate
platform rules. Authorities say the fraudsters spent over $1 million in stolen
cryptocurrency to fund the campaign.
In addition to the $300,000 frozen by the Attorney
General, the Brooklyn DA’s office reportedly seized $140,000 in stolen crypto.
Authorities also executed search warrants that resulted in the seizure of more
than 100 domain names and 17 domain registrar accounts. Scammers were disconnected from email accounts used to
communicate with victims, cutting off further contact.
Attorney General James encouraged New Yorkers affected
by crypto fraud to report suspicious activity through the OAG’s online
complaint system. She also invited industry workers to submit whistleblower
complaints, which may be filed anonymously.
This article was written by Jared Kirui at www.financemagnates.com.
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