Securities Regulation Daily Wrap Up, BLOCKCHAIN—Multi-agency probe halts crypto investment scam that targeted N.Y. Russian community, (Jun 20, 2025)

By Suzanne Cosgrove

The fraudsters appealed to investors with deceptive social media ads, many in Russian and primarily on Facebook.

Brooklyn District Attorney Eric Gonzalez, along with New York State Attorney General Letitia James and Superintendent of the New York State Department of Financial Services Adrienne Harris, announced a multi-agency investigation has disrupted a fraudulent cryptocurrency investment scheme aimed at members of the Russian community in Brooklyn and across the country. Over the course of the investigation, more than 300 victims were identified.

“I urge all New Yorkers to be vigilant of online cryptocurrency investment ads,” said Attorney General James. “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,” James said.

The agencies said in a release that stolen cryptocurrency was sent to domain registrars as payment to create fake cryptocurrency investment domains and to Meta as payment for Facebook advertisements that promoted fraudulent cryptocurrency investments.

Following the investigation, Meta shut down more than 700 accounts associated with the advertiser promoting the scam. In addition, court orders led to the seizure of $140,000 in cryptocurrency, the freezing of approximately $300,000 in cryptocurrency, and the dismantling of a group of scam websites and registrar accounts, the agencies said.

To avoid revealing their real identity and to evade Facebook’s restrictions on misleading and fraudulent advertisement, the scammers paid individuals 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 $1 million of cryptocurrency stolen from victims to pay “Black Hat” advertisers to place the deceptive ads.

A long-running investigation. In October 2024, NYDFS initially became aware that a fake cryptocurrency investment website was displaying what looked like a BitLicense certificate, purportedly issued by the agency. The first site NYDFS identified was WhalesTrade.com. 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 lured victims with social media ads, many in Russian, which featured popular names and personalities. When victims expressed an interest in investing, scammers moved the conversation to encrypted private messaging apps like WhatsApp and Telegram.

After the victims made an initial investment on the fraudulent platforms, scammers then falsely told the victims that their investment accounts were increasing in value and encouraged them to send more money. But when they made more investments, sometimes totaling hundreds of thousands of dollars, victims were unable to withdraw their funds and were told they needed to pay more in false withdrawal fees or taxes. Eventually, the scammers cut off contact with the victims and pocketed their money.

“Black Hat” funds frozen. Over the course of the investigation, many victims were contacted by Brooklyn District Attorney and New York State Department of Financial Services investigators and alerted to the fraud so that they would stop sending funds to fake investment platforms. To disrupt the scheme and prevent future harm, the DA’s Office executed a series of warrants that resulted in the seizure of over 100 domains and 17 registrar accounts and terminated scammers’ access to their web-based email, effectively disconnecting their communications with the victims.

When the Office of the Attorney General joined the investigation, it focused on the payment of funds to the “Facebook Black Hat” advertisers. Its investigation revealed that a “Black Hat” advertiser was converting Bitcoin sent by victims into local Vietnamese currency, which was used to purchase more fraudulent ads on Facebook.

The OAG successfully obtained a court order to freeze $300,000 in cryptocurrency accounts linked to the “Black Hat” advertisers.

“Through partnership and collaboration with the Brooklyn District Attorney and New York Attorney General, hundreds of thousands of dollars were returned to victims,” Harris said.

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