A multi-agency operation has taken down a deceptive cryptocurrency scam that preyed on the Russian-speaking community in Brooklyn and beyond. The collaborative effort involving the Office of New York State Attorney General Letitia James and the New York State Department of Financial Services (NYDFS) successfully disrupted the scheme, resulting in over $140,000 in recovered stolen funds and an additional $300,000 frozen, the Brooklyn District Attorney's Office announced
Commencing in October 2024, the probe unearthed a sham cryptocurrency website, WhalesTrade.com, feigning legitimacy by displaying a false BitLicense certificate. The NYDFS emphasized these certificates are only issued to bona fide virtual currency businesses in compliance with New York's regulatory standards. The expansive scam network utilized Facebook ads, among other methods, to lure in victims while masking the scammers' true identity. "As crypto scams continue to proliferate, it is crucial for law enforcement agencies to work together in order to stop them," District Attorney Eric Gonzalez stated in a release from the Brooklyn DA’s Office.
In their pursuit of justice, investigators scrutinized payments made to so-called "Black Hat" advertisers on Facebook – entities that peddle services in violation of the platform's advertising guidelines. Scammers relied on stolen cryptocurrency to fund these fraudulent ad placements, enlisting an individual from Vietnam to obfuscate the money trail. The ads often featured high-profile names and promised lofty returns, convincing many to invest their hard-earned money. Attorney General James urged New Yorkers "to be vigilant of online cryptocurrency investment ads," citing the hundreds of swindled investors.
The collaborative enforcement was not only about hinderance and disruption. "Through partnership and collaboration with the Brooklyn District Attorney and New York Attorney General, hundreds of thousands of dollars will be returned to victims and these criminals were held accountable for their deplorable actions," Superintendent Adrienne Harris detailed. The initiative spanned beyond the seizure of assets; a proactive stance was taken, with investigators warning potential victims, leading to over 300 people being alerted, significantly cutting off future funding avenues for the fraudsters, as per the Brooklyn DA’s Office.
Residents seeking to verify the legitimacy of cryptocurrency exchanges or report suspicions of fraud have been pointed towards the DFS website, where they can file complaints or call for assistance. Alongside, the Brooklyn DA has put out a call, inviting locals who suspect they've fallen prey to scams to contact their office and provided channels for whistleblowers in the cryptocurrency industry to report misconduct anonymously.
