Authorities in New York have successfully disrupted a large-scale scam involving cryptocurrency. Letitia James, the current New York Attorney General and her team were able to freeze $300,000 worth of crypto that was associated with the fraud scheme. Reports suggest that the scheme was being run internationally and was targeting hundreds of residents across Brooklyn and beyond.

The Rising Popularity of Crypto

The scam comes at a time when cryptocurrency is becoming increasingly popular both in the US and around the world. At the time of writing, 28% of American adults own or have owned cryptocurrency, and many more have shared an interest in doing so in the future. The popularity of digital assets comes from a variety of reasons including the volatility of crypto, meaning its tendency to rise and fall in value over time, its decentralized nature, and its easy incorporation into other sectors.

One sector that is successfully integrating the world of crypto into its platforms is the online gambling scene. Trusted Bitcoin gambling websites not only allow their users to wager and withdraw funds using crypto but also offer massive game libraries, impressive bonuses and even allow gamblers to retain their anonymity by not forcing them to pass know-your-customer checks in order to access content.

The Scam

The scam targeted Russian-speaking individuals, mainly in Brooklyn, and made use of social media advertisements in an attempt to reel people in. These victims were told that by sharing their information, they were joining a crypto trading platform, but this platform was a fake. Altogether the scam led to a loss of over $1 million in Brooklyn alone.

The scam was running from Vietnam and used Russian-language Facebook ads to promote the fake platform. Reports say that it was expertly crafted and looked incredibly legitimate. The so-called ‘trading platforms’ then encouraged victims to invest money for crypto multiple times, increasing in value if they invested the first time.

The reason many continued to invest still without realizing that they were the victim of a scam is because they showed realistic-looking fabricated accounts of financial growth. These people believed that, by giving the site their money, they were making a profit. Alongside this, the scam would prompt victims to part with more funds for extra fees such as withdrawal fees or to pay off taxes. It was reportedly very difficult to notice that anything was amiss with the website.

Once a certain amount of time had passed, and the scammers had secured a decent amount of money from a victim, all communications with the victim would be cut off, leaving the individual without access to their funds.

The Investigation

The investigation into the scam was conducted by the New York Department of Financial Services (DFS), the Attorney General’s office, and the Brooklyn District Office. These authorities then alerted Meta, the company that owns and runs Facebook, as well as Instagram and WhatsApp, who shut down more than 700 accounts that they believed to be involved in the scam.

Eric Gonzalez, the Brooklyn District Attorney, spoke on the importance of different law enforcement agencies working together as “crypto scams continue to proliferate.” He suggested that the ways these three agencies had come together allowed for the scam to be shut down in a timely manner, warned victims not to invest, and resulted in some of the stolen funds being recovered and returned to their previous owners.

The identification of the scam

The scam was first identified in October of last year. The first indication came when a website was discovered to be using a fake BitLicense certificate. These licenses are given by the state to authentic crypto websites so that they can prove to their users that they operate legitimately.

Following the threads of the website, investigators soon found links to a much larger network of false websites and accounts all created with the intention of scamming the general public out of their funds and using crypto to do so.

The reason the scam was not identified earlier comes from the fact that the scammers had gone to great lengths to avoid detection. Using an estimated $1 million of their stolen crypto funds, the scammers paid a Vietnamese individual to advertise their platform in a way that would go undetected by Facebook itself.

Conclusion

It is undeniable that cryptocurrency is becoming increasingly popular both in the United States and across the globe. Although this is a positive thing for many crypto investors and enthusiasts, it also means that the more attention digital assets get from the general public, the more crypto-related scams and hacks will begin to emerge. Everyone is susceptible to scams, and this especially applies to the elderly and vulnerable. Residents are encouraged to remain vigilant, always do their research, and report any crypto-related activity that they deem suspicious.