NYC officials bust Facebook-fueled crypto scam targeting Russian-speaking residents

A crypto scam that used Facebook ads to target Russian-speaking residents of New York City has been disrupted, according to local authorities who said on Wednesday they had both seized and frozen funds.

"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 investment opportunities," according to a statement issued by the New York State Department of Financial Services.

The New York officials said Meta shut down more than 700 accounts tied to the 'Black Hat' advertiser promoting the scam.

"Court orders have led to the seizure of $140,000 worth of cryptocurrency, the freezing of approximately $300,000 worth of cryptocurrency, and the dismantling of a cluster of scam websites and registrar accounts," the statement said.

Black Hat advertising refers to using online ads to mislead users.

Targeting Russian speakers

Authorities say the investigation kicked off last October after officials discovered a fake crypto site using "what looked like" BitLicense certificate. Allegedly, the site, WhalesTrade.com, was connected to a scam network targeting Russian-speaking victims located in Brooklyn.

WhalesTrade.com is no longer active.

Perpetrators of the scam allegedly used deceptive, Russian-language Facebook ads in Russian, "featuring popular names and personalities" to first lure victims into WhatsApp and Telegram chats before then duping them into making investments. Victims were told they were earning money and should invest more.

"After making 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," according to a statement. "Eventually, the scammers cut off contact with the victim and pocketed their money."

Officials identified more than 300 victims, and the scheme resulted in more than $1 million in losses, according to the statement.

That's a relatively low sum of money when compared to all the losses related to crypto scams reported last year. Fraud cases involving crypto resulted in losses valued at over $5.8 billion in 2024, according to the FBI Internet Crime Complaint Center.

The officials out in front of Wednesday's announcement included Brooklyn District Attorney Eric Gonzalez, New York State Attorney General Letitia James, and Superintendent of the New York State Department of Financial Services Adrienne Harris.