News Summary
New York Attorney General Letitia James announced the freezing of $300,000 worth of cryptocurrency as part of an investigation into a fraud scheme targeting Russian-speaking residents. The scam, orchestrated by scammers in Vietnam, resulted in over $1 million in losses. Authorities worked together to shut down fraudulent accounts and educate potential victims on reporting scams, while new legislation is being introduced to better protect investors from cryptocurrency-related fraud.
Brooklyn, New York – The New York Attorney General Letitia James announced the freezing of $300,000 worth of cryptocurrency as part of an ongoing investigation into an international fraud scheme that has targeted hundreds of Russian-speaking residents across Brooklyn and the surrounding areas. Authorities have estimated that the scam has resulted in over $1 million in losses in Brooklyn alone.
The scheme was identified through a coordinated investigation involving the Attorney General’s Office, the Brooklyn District Attorney’s office, and the New York Department of Financial Services (DFS). According to reports, scammers located in Vietnam used fraudulent Russian-language Facebook advertisements to lure victims into fake cryptocurrency trading opportunities.
Victims were directed to bogus trading platforms where they were encouraged to invest increasing amounts of money. After making initial deposits, these individuals were shown fake account growth metrics and were subsequently asked to pay additional fees, which were disguised as withdrawal fees or taxes. Eventually, the fraudsters cut off all means of communication, leaving victims locked out of their invested funds.
In response to the scam, Meta (Facebook’s parent company) shut down more than 700 accounts associated with the fraudulent advertising campaign after being made aware of the situation by authorities. Furthermore, over 300 individuals were confirmed to be affected by this fraud, prompting investigators to reach out to many of the victims in order to prevent further financial losses.
The fraudulent activity first came to light in October 2024, when officials from DFS discovered a deceptive website that featured a fake BitLicense certificate. This website, known as WhalesTrade.com, served as a gateway that led investigators to a wider network of associated fraudulent websites and accounts. It was revealed that the scammers had paid a Vietnamese individual to conduct “Black Hat” advertising services to avoid detection on social media platforms.
In addition to the frozen funds, the Brooklyn District Attorney’s office seized another $140,000 in stolen cryptocurrency during the investigation. Search warrants were executed, resulting in the seizure of over 100 domain names and 17 domain registrar accounts, further dismantling the fraud operation. As a part of the crackdown, the scammers were successfully disconnected from the email accounts they used to communicate with victims, effectively shutting down their operations.
In light of the rampant crypto fraud, Attorney General James is urging New Yorkers who believe they may have fallen victim to cryptocurrency scams to report suspicious activities through the Office of the Attorney General’s online complaint system. Victims are also encouraged to file anonymous whistleblower complaints to help law enforcement take action against fraudsters.
In response to the growing concern over cryptocurrency scams, New York lawmakers are taking action by introducing legislation aimed at better protecting investors. Assemblymember Clyde Vanel has introduced Bill A06515, which seeks to impose criminal penalties specifically targeting virtual token fraud. This legislation intends to create new criminal charges that directly tackle deceptive practices related to cryptocurrencies.
The prevalence of crypto-related crime is significant, with reported losses amounting to approximately $51 billion annually, according to data from Chainalysis. The Federal Bureau of Investigation (FBI) has also noted a staggering 45% increase in crypto-related losses, reporting $5.6 billion lost in just 2023 due to various scams and frauds. The cryptocurrency industry continues to grapple with the challenges posed by fraud, scams, and hacks, with industry leaders, including Coinbase’s CEO, calling for enhanced compliance measures to protect investors effectively.
Deeper Dive: News & Info About This Topic
HERE Resources
New York Freezes $300,000 in Cryptocurrency Fraud Scheme
New York Proposes FAIR Business Practices Act for Consumer Protection
New York Attorney General Introduces Consumer Protection Act
New York Sets the Standard for Cryptocurrency Regulation
New York Proposal to Accept Digital Currency Payments
Additional Resources
- Finance Magnates: New York Disrupts Cross-Border Crypto Scam
- Wikipedia: Cryptocurrency Fraud
- Finance Feeds: New York Authorities Disrupt Crypto Scam
- Google Search: Crypto Scams
- Cointelegraph: NY Bill to Criminalize Crypto Fraud
- Encyclopedia Britannica: Cryptocurrency
- The New York Times: Trump, Crypto, Tether
- Google News: Cryptocurrency Regulations
