New York Attorney General Letitia James has taken decisive action against a cross-border cryptocurrency scam, freezing $300,000 worth of digital assets linked to a scheme that targeted hundreds of Russian-speaking residents across Brooklyn and beyond. This operation, fraught with deception, utilized social media ads to lure unsuspecting victims into fake crypto investment platforms, resulting in over $1 million in losses within Brooklyn alone.
Unveiling the Deception: Facebook Ads as a Gateway
The intricate investigation, led by the Office of the Attorney General, the Brooklyn District Attorney, and the New York Department of Financial Services (DFS), unveiled that scammers, primarily based in Vietnam, cleverly employed Russian-language Facebook ads to market seemingly legitimate crypto trading opportunities.
How the Scam Unfolded
These deceptive ads directed victims to fraudulent platforms, enticing them to invest increasing sums of money. Initially, victims were shown fabricated account growth, which created an illusion of success and profitability. Soon, they were hit with demands for additional payments hidden under pretexts like “taxes” or “withdrawal fees.” Ultimately, communication was severed, leaving victims locked out of their funds.
In a robust response, Meta, the parent company of Facebook, swiftly shut down more than 700 accounts associated with this fraudulent advertising campaign upon being alerted by authorities.
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The Urgent Call to Action from Law Enforcement
“As crypto scams continue to proliferate, it is essential for law enforcement agencies to collaborate effectively to tackle them,” stated Brooklyn District Attorney Eric Gonzalez. His remarks highlight a significant law enforcement success story: the cessation of a fraudulent network that promptly warned victims to withdraw their investments, ultimately recovering some of the stolen funds.
A Victim’s Reality: Over 300 Individuals Affected
The depth of this scam’s impact cannot be overstated, with more than 300 individuals identified as victims. Investigators proactively contacted numerous victims to issue warnings before they made any further investments, successfully preventing additional monetary losses.
The scam first came to light in October 2024, when the DFS uncovered a website that falsely displayed a BitLicense certificate—a regulatory requirement in New York aimed at ensuring compliance in virtual currency businesses. This fraudulent site—WhalesTrade.com—served as a gateway to uncover a larger network of related fake websites and accounts.
The Dark Side of Advertising: Black Hat Tactics
To shroud themselves in secrecy and avoid detection by Facebook, the scammers engaged a Vietnamese individual to utilize “Black Hat” advertising services—a term describing deceptive marketing practices that violate platform regulations. Reports suggest that these fraudsters squandered over $1 million in stolen cryptocurrency to fund their deceptive campaign.
Seizing Assets: A Comprehensive Law Enforcement Response
In addition to the $300,000 frozen by the Attorney General, the Brooklyn DA’s office reportedly confiscated $140,000 in stolen crypto and executed search warrants that led to the seizure of over 100 domain names and 17 registrar accounts. This decisive action effectively severed the scammers’ communication lines, further mitigating potential losses for victims.
Empowering Victims: Reporting Suspicious Activity
Attorney General Letitia James has urged New Yorkers who believe they are victims of crypto fraud to report any suspicious activity through the Attorney General’s online complaint system. She also encouraged industry professionals to submit whistleblower complaints, emphasizing that reports may be filed anonymously.
The vigilance of law enforcement and swift action from Meta highlight a growing commitment to combating cryptocurrency scams. Staying informed and aware can be powerful defenses against these modern forms of fraud. The digital landscape is ever-evolving, and so too must our efforts to safeguard vulnerable individuals from falling victim to these schemes.
