BROOKLYN, N.Y. — Brooklyn District Attorney Eric Gonzalez announced Wednesday that his Virtual Currency Unit disrupted 241 scam domains and 112 servers in a multinational cryptocurrency fraud targeting Russian speakers.
Gonzalez called it one of the biggest operational cyber disruptions undertaken by a local prosecutor’s office. The Brooklyn District Attorney’s Office said the contents of the servers and domains confirmed millions of dollars in losses in Brooklyn and across the country.
“When scammers halfway around the world target Brooklyn residents, they should know they are not beyond our reach.”
He said the criminals stole many millions of dollars through an elaborate investment scheme. They then tried to exploit the victims again with false promises to recover the money, according to Gonzalez.
Gonzalez said the unit identified the fraud, tracked the stolen cryptocurrency and uncovered the infrastructure behind the operation. The office worked with the FBI to dismantle it, and he said the takedown has made it far harder for the scammers to victimize others.
The unit investigated the organization for three years. Brooklyn is home to a very large Russian population, and the district attorney said the scam disproportionately affected borough residents compared with the rest of the country.
The operation relied on cyber infrastructure and IP addresses in Ukraine and other Eastern European countries, according to the office. Last week, investigators executed numerous search warrants and took other enforcement actions across three time zones over several hours.
The action hit a cluster of more than 100 cloud-based servers hosted by Eastern European and American companies. Gonzalez said it deprived the scammers of access to the data that populated the domains, victim information and their operational software.
Before last week, the unit had already seized or disrupted 400 domains tied to cryptocurrency investment fraud. Those seizures alerted potential victims, the office said, but new scam websites appeared quickly.
Investigators then identified the servers supporting the scam worldwide and coordinated an international takedown with the FBI. Gonzalez said disrupting the infrastructure takes away the scammers’ ability to quickly create new websites or contact existing victims.
Brooklyn victims described a similar pattern at the start of the investigation. Each responded to a Facebook ad in Russian for investment opportunities and then received a call from an “investment advisor” who spoke Russian.
The advisor coached victims to open an account on a cryptocurrency investment platform website. With the advisor’s help, they bought cryptocurrency and transferred it to addresses linked to the platform sites.
After several weeks or months, victims who tried to withdraw money were locked out of their accounts. Others were told they had to pay additional fees and taxes, the office said.
Data recovered in the operation pointed to a second fraud. A few weeks after the initial deception, the scammers contacted victims again and promised they could recover the stolen assets, according to the district attorney.
Gonzalez estimated that tens of millions of dollars were stolen, with some victims losing their entire life savings. His office has seized about $300,000 so far and is working to recover more.
James C. Barnacle, assistant director in charge of FBI New York, credited the partnerships behind the disruption. He said the FBI will continue to support its partners with every available resource for New York communities.
Gonzalez thanked the FBI, Shadow Server, Coeus and UltaHost for their assistance. The case was investigated by Assistant District Attorney Alona Katz, chief of the Virtual Currency Unit, other members of the unit and analysts from the office’s Digital Evidence Lab, under Assistant District Attorney Jingu Chong, the lab’s chief, and the Detective Investigators Bureau.
