Investigation Recovers $140K in Funds; More Than 300 Victims Defrauded Through Fake Social Media Investment Ads
New York officials have disrupted a cryptocurrency investment scam that allegedly targeted Russian-speaking residents through fraudulent social media ads, leading to more than $1 million in losses. As part of the investigation, authorities recovered $140,000 in stolen funds and froze an additional $300,000 in cryptocurrency.
The operation was jointly led by the Brooklyn District Attorney’s Office, the New York State Attorney General’s Office, and the New York State Department of Financial Services (DFS). It marks one of the largest coordinated efforts in the state this year to dismantle a crypto-related fraud scheme.
Scammers Paid for Social Media Ads With Cryptocurrency
According to a Wednesday press release, scammers used cryptocurrency to fund Black Hat-style advertisements on Facebook and other platforms. These ads directed unsuspecting victims to fake crypto investment websites that falsely claimed to be licensed by the State of New York under the BitLicense regime.
“These scammers targeted Russian speakers on Facebook with enticing ads,” said New York Attorney General Letitia James.
“My office, together with DFS and the Brooklyn District Attorney’s Office, took action to stop these scammers and protect New Yorkers.”
The ads often mimicked the appearance of legitimate investment opportunities and featured misleading claims about guaranteed returns or regulatory approval. Authorities emphasized that many of the ads were written in Russian, specifically designed to exploit trust within tight-knit immigrant communities.
More Than 300 Victims and $1 Million in Losses
So far, investigators have identified over 300 victims, with combined losses exceeding $1 million in the Brooklyn area alone. Officials believe the scam likely impacted individuals across the entire United States.
“Although we’ve been able to recover a portion of the stolen funds, many victims lost their life savings,” said one official familiar with the case.
While authorities were able to seize $140,000 in assets and freeze $300,000 more in connected wallets, a large portion of the funds remain unrecovered — some of it having been laundered through mixers and international exchanges.
Meta Removes 700+ Fraudulent Ads
Facebook’s parent company, Meta, cooperated with authorities after being alerted to the fraudulent campaign. The company reportedly removed over 700 malicious ads, many of which were in Russian and appeared highly sophisticated.
The ads employed so-called Black Hat techniques — deceptive methods used by digital scammers to bypass content moderation and advertising guidelines. In some cases, ads impersonated well-known crypto executives or used misleading images and headlines to boost engagement.
Fake Licenses and Fraudulent Websites
To boost credibility, the scammers claimed their platform held a BitLicense — the official license required to offer crypto services in New York State. Investigators say this was entirely fabricated, and no such license existed.
The fake websites often mimicked the appearance of legitimate crypto platforms, featuring fraudulent customer reviews, automated trading dashboards, and false claims of partnerships with major financial institutions.
These tactics mirror those seen in earlier phishing and investment scams, including the Ripple/XRP airdrop frauds, where Ripple CEO Brad Garlinghouse was impersonated in fake giveaways across X (formerly Twitter) and YouTube.
Broader Concerns Over Crypto-Related Fraud
The case comes amid rising scrutiny over the use of cryptocurrencies in scams, particularly those that leverage social media platforms to reach and mislead retail users.
According to Chainalysis, crypto-related illicit transaction volume totaled approximately $51 billion in 2024. While some sectors, such as ransomware payments, saw a 35% decline, investment scams and impersonation frauds remain a persistent issue.
Industry experts have also warned of the growing use of artificial intelligence in facilitating these scams, enabling bad actors to generate realistic images, voices, and customer support interactions.
“We’re now seeing a new wave of AI-powered scam campaigns,” said one blockchain forensics expert.
“This makes it harder than ever for ordinary users to distinguish fake investment opportunities from real ones.”
Consumer Protection Remains a Top Priority
Attorney General Letitia James urged all New Yorkers to remain vigilant of online crypto investment ads, especially those that promise guaranteed returns or make claims about government endorsement.
“If it sounds too good to be true, it probably is,” she said.
“Crypto remains a high-risk environment for consumers, and we are committed to using every legal tool available to protect the public.”
The New York Department of Financial Services reiterated its commitment to tightening crypto licensing oversight and enhancing transparency requirements for registered entities operating in the state.
Conclusion
The seizure and freezing of over $440,000 in stolen crypto funds mark a significant step in cracking down on digital asset-related fraud in New York. However, with more than $1 million in total losses and hundreds of victims, the case also underscores the ongoing vulnerability of retail investors, particularly within language-specific communities.
As regulators continue to investigate and dismantle similar operations, users are being urged to rely only on verified platforms, avoid unsolicited ads, and report suspicious investment schemes to state financial authorities.
