Key Takeaways
- • Brooklyn District Attorney Eric Gonzalez's Virtual Currency Unit, working with the FBI, disrupted 112 servers and seized or disrupted 241 web domains used in a multinational crypto investment scam targeting Russian speakers in the U.S.
- • Prosecutors estimate the scheme stole tens of millions of dollars, with some victims losing their entire life savings, and the office has seized about $300,000 so far.
- • The scam lured victims through Russian-language Facebook ads, then used a fake "investment advisor" to steer them into crypto platforms, followed by a recovery scam weeks later.
- • Infrastructure was hosted by Eastern European and American companies, with scammers relying on IP addresses in Ukraine and other Eastern European countries.
- • The unit had investigated the operation for three years and had previously disrupted about 400 linked domains, but new sites kept appearing; the server takedown is intended to cut off the operators' ability to create new sites and contact victims.
Summary
Brooklyn prosecutors have dismantled the online infrastructure of a multinational crypto investment scam that targeted Russian speakers in the United States, District Attorney Eric Gonzalez announced on Wednesday. According to the DA's office, its Virtual Currency Unit carried out search warrants and other enforcement actions across three time zones last week, working with the FBI. The operation disrupted 112 servers and 241 web domains. The servers were hosted by Eastern European and American companies, and the scammers relied on infrastructure and IP addresses in Ukraine and other Eastern European countries, according to the release.
The scheme began with Russian-language Facebook advertisements promising investment opportunities. Victims who responded were then called by an individual posing as an "investment advisor" who coached them into opening accounts on a crypto investment website. With the advisor's help, victims bought crypto and sent it to addresses linked to the platforms. When they attempted to withdraw after weeks or months, they were locked out or told to pay additional fees and taxes. Data from the seized servers showed the operators also ran a recovery scam, contacting victims a few weeks after the initial fraud and promising to recover their stolen assets.
Prosecutors estimate the scheme stole tens of millions of dollars. Because Brooklyn has a large Russian-speaking population, the borough's residents were disproportionately affected, the office said. The unit had been investigating the operation for three years and had already seized or disrupted 400 domains linked to the fraud before last week, but new scam websites continued to appear. The DA's office said the server takedown removes the scammers' ability to quickly create new sites and reach existing victims. About $300,000 in stolen funds has been seized so far, and the office says it is working to recover more.
The case is not the Brooklyn DA's only recent crypto fraud matter. Its prosecutors previously charged a local man who stole $16 million from nearly 100 Coinbase users through a phishing scheme, and he was sentenced to up to 12 years in prison.
The scheme began with Russian-language Facebook advertisements promising investment opportunities. Victims who responded were then called by an individual posing as an "investment advisor" who coached them into opening accounts on a crypto investment website. With the advisor's help, victims bought crypto and sent it to addresses linked to the platforms. When they attempted to withdraw after weeks or months, they were locked out or told to pay additional fees and taxes. Data from the seized servers showed the operators also ran a recovery scam, contacting victims a few weeks after the initial fraud and promising to recover their stolen assets.
Prosecutors estimate the scheme stole tens of millions of dollars. Because Brooklyn has a large Russian-speaking population, the borough's residents were disproportionately affected, the office said. The unit had been investigating the operation for three years and had already seized or disrupted 400 domains linked to the fraud before last week, but new scam websites continued to appear. The DA's office said the server takedown removes the scammers' ability to quickly create new sites and reach existing victims. About $300,000 in stolen funds has been seized so far, and the office says it is working to recover more.
The case is not the Brooklyn DA's only recent crypto fraud matter. Its prosecutors previously charged a local man who stole $16 million from nearly 100 Coinbase users through a phishing scheme, and he was sentenced to up to 12 years in prison.
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