FOR IMMEDIATE RELEASE
Thursday, December 19, 2024
Brooklyn District Attorney’s Virtual Currency Unit Developed New
Technique for Fighting Crypto Scams – Seizing Fraudsters’ Email Lists
Enabled DA’s Office to Warn Victims to Stop Investing; Used in Long-Term Investigation That
Shuttered 70 Bogus Domains That Were Scamming Members of Brooklyn’s Russian Community
Brooklyn District Attorney Eric Gonzalez today announced that following a long-term investigation, his Virtual Currency Unit successfully disrupted a cryptocurrency scam operation that targeted members of the Russian community, shuttering 70 fraudulent domains that caused an estimated $1 million loss in Brooklyn and $5 million nationwide. Investigators used a novel way to disrupt the illegal scheme by seizing the mail server used by the scammers, extracting data and contact information for everyone the scammers were communicating with, and emailing alerts to over 1,200 identified victims, advising them to stop sending money to what were fake investment websites. Those actions are part of an ongoing effort to stem cryptocurrency schemes in the Russian community and beyond.
Brooklyn District Attorney Eric Gonzalez said, “We are using every tool at our disposal to stop crypto investment scams. Since recovering lost funds is often impossible because they’re typically quickly cashed overseas, we focus on disruption and education. In this successful investigation, we used a new technique of seizing the email servers and warning victims that the investments they made were fake, preventing untold losses. We also hosted a seminar in the Russian community this week to educate the public. I am committed to continue to protect Brooklyn residents from these pervasive digital crimes.”
The District Attorney said that after a long-term investigation, his Virtual Currency Unit seized 70 web domains that offered fake cryptocurrency investment services, mostly to members of the Russian community. This follows a previous seizure in May of another 70 domains, bringing the total amount of shuttered domains linked to this scheme to 140. The estimated losses of the scheme added up to $1 million in Brooklyn and $5 million throughout the US.
The purported financial advisers who communicated with the victims used a web-based mail server, the investigation found. For the first time anywhere in this type of probe, Brooklyn prosecutors were able to execute warrants to seize and take control of the server, cutting off the scammers from the victims, their contact lists, and address books. Earlier this week, the DA’s Office sent an email blast to about 1,200 email addresses that were extracted from the server, warning users that “advisers” emailing them from “stocks-finance.com” addresses were scammers and to immediately stop sending money.
Also this week, the DA’s Office joined federal partners – the Commodity Futures Trading Commission, the Security and Exchange Commission and the FBI – in hosting an educational seminar in Brighton Beach. Over 100 people attended and received tips on how to recognize warning signs and how to protect themselves from crypto-based investment scams.
The District Attorney shared the following tips on how to protect people from these cryptocurrency scams:
- Don’t trust cryptocurrency investment opportunities that seem too good to be true.
- Do not make cryptocurrency investments based on the advice of someone you’ve never met in person.
- Don’t download investment apps from unverified cryptocurrency investment websites.
- Verify the legitimacy of a company. Ask a friend, family member, or contact the KCDA Command center if you are unsure if something is legitimate.
- Do not pay more money in order to try and recover your investment from a cryptocurrency website.
- Check whether a cryptocurrency exchange is licensed to operate in New York State by going to https://www.dfs.ny.gov/who_we_supervise or calling the New York State Department of Financial Services hotline at 800-342-3736.
The investigation into this case was handled by Assistant District Attorney Alona Katz, Chief of the Virtual Currency Unit, with assistance from Virtual Currency Analyst Sam Weaver, Assistant District Attorney Brian Umana, a Senior Detective Investigator and paralegal Claire Fagan.
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Flyer distributed in the Russian community by the Brooklyn DA’s Office