Crypto Journalist
Anas Hassan
Crypto Journalist
Anas Hassan
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New York law enforcement has seized over $440,000 in stolen cryptocurrency as part of an ongoing multi-agency investigation into a sophisticated crypto scam that preyed on Russian-speaking communities through deceptive Facebook ads.
The fraudulent scheme, which reportedly caused over $1 million in losses in Brooklyn alone, lured hundreds of victims into investing in fake cryptocurrency trading platforms through a sprawling network of scam websites and manipulated social media campaigns.
Crypto Scam Network Exploited Facebook Ads to Target Russian-Speaking Investors
On June 18, Brooklyn District Attorney Eric Gonzalez, New York State Attorney General Letitia James, and Department of Financial Services (DFS) Superintendent Adrienne Harris jointly announced the seizure and freezing of stolen digital assets.
The coordinated crackdown targeted an elaborate scam operation that misused Facebook ads, many written in Russian, to promote bogus crypto investment opportunities to residents of Brooklyn and other U.S. regions with large Russian-speaking populations.
The scammers paid Vietnamese-based “Black Hat” advertising providers to bypass Facebook’s ad restrictions and disguise their true identities.
More than 700 deceptive accounts were eventually shut down by Meta after being linked to the operation.
According to officials, court-authorized actions have so far led to the seizure of $140,000 in cryptocurrency, the freezing of another $300,000, and the dismantling of over 100 scam domains and 17 registrar accounts.
“Politically Acceptable” Front: Fake BitLicense and Trust-Building Tactics
The investigation began in October 2024 when the New York State Department of Financial Services (NYDFS) discovered that the scam’s primary site, WhalesTrade.com, displayed a counterfeit BitLicense, New York’s regulatory certification for compliant virtual currency businesses.
Investigators soon uncovered a vast network of interlinked domains and accounts impersonating legitimate crypto services.
Scammers also mimicked real influencers in Facebook ads to establish false credibility.
Once contact was made, victims were moved to encrypted messaging apps like WhatsApp and Telegram, where they were manipulated into making initial deposits.
Victims were shown fake dashboards with rising profits, encouraging them to invest more. When attempting withdrawals, they were told to pay fabricated taxes or fees before ultimately being cut off.
Hundreds Contacted, as Crypto Scams Continue to Surge
More than 300 victims were identified, and many were personally contacted and warned by investigators before they sent additional funds.
Notably, the crackdown is part of a broader global concern. The Australian Competition and Consumer Commission (ACCC) previously reported that over 50% of crypto ads on Facebook are either scams or policy violations, a claim supported by its 2022 lawsuit against Meta for enabling fraudulent celebrity-endorsed crypto ads.
Just hours before New York’s announcement, the U.S. Department of Justice seized $225.3 million in USDT connected to a massive “pig butchering” scam that defrauded over 400 victims, marking the largest crypto seizure of its kind.
According to the FBI’s 2024 IC3 report, crypto-related scams caused $9.3 billion in losses in 2024, a 66% year-over-year increase. Since January, 5,400 individuals have been notified that they are targets of such schemes.
The rise in crypto fraud has also been fueled by criminal activity on the darknet.
In a separate action on June 5, U.S. law enforcement seized cryptocurrency tied to BidenCash, a notorious darknet marketplace implicated in trafficking more than 15 million stolen credit cards and personal data records.
The international crackdown dismantled approximately 145 web domains, spanning both darknet and surface internet sites linked to the illicit platform.
Meanwhile, new research from blockchain analytics firm Chainalysis shows that Russia remains a central hub in the evolution of global darknet markets.
Among the most prominent players, one platform stood out, the “Kraken” darknet market (not affiliated with the legitimate crypto exchange Kraken), raking in $737 million in cryptocurrency-based transactions.
