New York Exposes Massive Crypto Fraud Scheme Preying on Russian Investors
New York regulators just dropped a bombshell—a sprawling crypto scam operation targeting Russian investors has been uncovered. Here’s how it went down.
The Bait: Promising 'risk-free' returns, the scheme lured victims with flashy DeFi pitches and fake celebrity endorsements. Classic playbook, fresh victims.
The Hook: Operators used opaque smart contracts to drain wallets, leaving investors holding worthless tokens. Even by crypto’s Wild West standards, this was brazen.
The Fallout: While regulators scramble to freeze assets, one thing’s clear—when a deal sounds too good to be true, it usually is. Especially in crypto, where the house always wins.
Facebook Scams Target Brooklyn Residents
Social media scams are a major component of today’s crypto industry, and this incident is a classic example. Attorney General James made a statement announcing this crackdown, providing a few key details.
A Vietnamese team used Russian-language ads to convince hundreds of victims to invest in fake exchanges, stealing huge sums of money:
“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. My office, together with [law enforcement], took action to stop these scammers and protect New Yorkers. I urge all New Yorkers to be vigilant of online cryptocurrency investment ads,” she said.
It’s unclear how long this scam ring was operational, but local law enforcement noticed suspicious Facebook posts in October 2024.
The criminals focused their efforts on Russian speakers in Brooklyn, also working in the other boroughs and throughout the state. Police didn’t name the total losses, but $1 million was stolen from Brooklyn residents alone.
DFS, in collaboration with the Brooklyn DA's Office and the Office of the Attorney general, has successfully concluded an investigation into a crypto scam network that stole over $1 million from victims in Brooklyn alone.
For more information, visit https://t.co/TRrptFqxQi. pic.twitter.com/v2jpHA45gU
Despite the scammers’ best efforts to conceal their Facebook operations, police deciphered this network. The team was based in Vietnam, using proxies to host the ads and encouraging potential victims to MOVE to Telegram for private conversations.
Attackers WOULD show victims phony exchange accounts with high growth rates, encouraging more investment.
Law enforcement seized $140,000 in crypto, froze another $300,000, and took down domain names and email addresses. Police claimed that the hackers spent at least $1 million of victims’ assets covering their tracks, an unsuccessful effort that may have severely hampered their profits.
Despite these measures, these agencies have no immediate way to pursue criminals in Vietnam. The entire team behind these crypto social media scams remains at large.
The court order only names three members but says there are “unnamed others” involved.
Last year, AG James vowed to crack down on crypto criminals, and this social media scam ring certainly qualifies. James has been a long-time opponent of pro-crypto policies, and she’s continued her vocal opposition during Trump’s second term.
This stance may put her at odds with city officials from time to time, but today’s operation worked with at least three other agencies.
