Attorney General James Freezes $300,000 in Cryptocurrency Linked to Scammers Targeting New Yorkers

NEW YORK – New York Attorney General Letitia James today announced that her office took action to stop a fraudulent cryptocurrency investment scam that targeted hundreds of Russian-speaking New Yorkers in Brooklyn and across the country. A joint investigation by the Office of the Attorney General (OAG), the Brooklyn District Attorney’s Office, and the New York State Department of Financial Services (DFS), found that Vietnam-based scammers defrauded victims by luring them with deceptive social media ads in Russian that claimed big returns on cryptocurrency and other investments. The scammers convinced more than a hundred victims to purchase cryptocurrency and invest it into fake trading platforms, then stole the victims’ assets and disappeared. After learning of the investigation, Meta shut down more than 700 accounts associated with an advertiser promoting the scam. The OAG secured a court order freezing $300,000 worth of cryptocurrency linked to the scammers, and the Brooklyn District Attorney’s Office seized an additional $140,000 worth of cryptocurrency. 

“Hundreds of New York investors thought they were putting their hard-earned money in safe, high-return investments, only to be defrauded out of millions of dollars,” said Attorney General James. “These scammers targeted Russian speakers on Facebook with enticing ads and my office, together with DFS and the Brooklyn District Attorney’s office, took action to stop these scammers and protect New Yorkers. I urge all New Yorkers to be vigilant of online cryptocurrency investment ads.”

“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. I am grateful for the partnership with the Attorney General’s Office and the Department of Financial Services that led to this successful outcome. My office will continue to investigate every reported scam in Brooklyn and to educate residents about how to protect themselves from these dangerous frauds.”  

“Through partnership and collaboration with the Brooklyn District Attorney and New York Attorney General, hundreds of thousands of dollars were returned to victims and these criminals were held accountable for their deplorable actions,” said New York State Department of Financial Services Superintendent Adrienne Harris. “As a preeminent global regulator of cryptocurrency, banks, insurers, and other financial services providers, the Department will continue to work every day to build a more equitable, transparent, and resilient financial system for all New Yorkers.”

The investigation started in October 2024 when DFS became aware that a fake cryptocurrency investment website was displaying what looked like a BitLicense certificate, purportedly issued by the agency. These certificates are issued to legitimate virtual currency businesses operating in New York to ensure compliance with state laws, consumer protection, and transparency. The first site NYDFS identified was WhalesTrade.com and further investigation revealed that the domain name was linked to a large network of related domains and accounts that were part of a scam campaign targeting Russian-speaking residents of Brooklyn and across the state and country.   

The scammers involved in this scheme lured victims with deceptive social media ads, many in Russian, featuring popular names and personalities. Once victims showed interest in investing, scammers responded to them and moved the conversation to encrypted private messaging apps like Telegram. After the victims made an initial investment on the fraudulent platforms, scammers then falsely showed the victims that their investment accounts were increasing in value and encouraged victims to send more money. After making more investments, sometimes totaling hundreds of thousands of dollars, victims were unable to withdraw their funds and told they needed to pay more in false withdrawal fees or “taxes.” Eventually, the scammers cut off contact with the victim and pocketed their money. 

The scammers targeted Russian speakers by launching a campaign of advertisements on Facebook that promised high returns on cryptocurrency investments. To avoid revealing their real identity to Facebook and to evade restrictions on misleading and fraudulent advertisement, the scammers paid an individual based in Vietnam for “Black Hat” advertising services. “Black Hat” advertising on Facebook refers to deceptive online tactics used to promote services that violate Facebook’s advertising policies.  The investigation revealed that the scammers used over a million dollars’ worth of cryptocurrency stolen from victims to pay the “Black Hat” advertiser for the placement of the deceptive advertisements.   

In the course of the investigation, more than 300 victims were identified, and many were personally contacted by the Brooklyn District Attorney and DFS investigators and alerted to the fraud so that they would stop sending funds to fake investment platforms. It’s estimated that the scheme caused over $1 million in losses in Brooklyn alone. To disrupt the scheme and prevent future harm, the Brooklyn District Attorney’s Office executed a series of warrants that resulted in the seizure of over 100 domains and 17 registrar accounts; terminated scammers’ access to their email, effectively disconnecting their communications with victims; seized $140,000 that was stolen from victims that can now be returned; and was able, with DFS, to monitor blockchain activity in real time and warn dozens of victims who had just started engaging with the scammers, preventing the future loss of funds. The OAG secured a court order freezing $300,000 worth of cryptocurrency linked to the scammers.

Attorney General James urges New Yorkers who have been affected by deceptive conduct in cryptocurrency markets to report the conduct to OAG by filing an online complaint. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint, which can be done anonymously.

Residents of New York who want to verify the legitimacy of a cryptocurrency exchange or file a complaint about a cryptocurrency company, product, or service can visit the DFS website, dfs.ny.gov/complaint or call (800) 342-3736. DFS continues to set the bar for prudential regulation of virtual currency, protecting consumers, preserving markets, and rooting out financial crimes like money laundering and terrorist financing.  

Attorney General James thanks the Brooklyn District Attorney’s Office and DFS for referring this matter and assisting OAG with the investigation and digital asset tracing.

This matter is being handled for OAG by Senior Enforcement Counsel Adam Wasserman and Tanya Trakht, with the assistance of Legal Assistant Joline Ferguson and volunteer law clerk Joseph Jackson, all of the Investor Protection Bureau. The Investor Protection Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.