Over 70 Bitcoin Scams Shut Down By New York Law Enforcement

The New York County District Attorney's Office has shut down more than 70 allegedly fraudulent bitcoin investment sites.

AccessTimeIconJan 27, 2015 at 11:05 p.m. UTC
Updated Sep 11, 2021 at 11:28 a.m. UTC
NYC Court
NYC Court

More than 70 websites promising unrealistically high returns on bitcoin investments have been shut down by the New York County District Attorney's office.

As originally reported by Bloomberg News, 73 sites were taken offline on 16th January by the office, including BitcoinHYIP.org and others owned by a company called YouYou Finance.

The defendants are accused of securities fraud and intent to commit fraud, as well as larceny charges, according to documents provided to CoinDesk. The investigator explained the background of his investigation into high-yield investment schemes based on bitcoin, as well as how the office went undercover and used the services.

The complaint read:

"Defendant BITCOINHYIP.ORG represented both in its communications with me and on its website that it 'was [b]acked by a REAL company' and had a 'long history.'"

The office determined that BitcoinHYIP.org belonged to YouYou Finance, which owned dozens of other similar sites.

Investors targeted with high yield promise

The complaint, filed on 26th January, details how the district attorney's office first began looking into websites targeting bitcoin investors in July.

Notably, the document states that, in the case of investment schemes, bitcoin can be interpreted as acting as a type of security, arguing that "by seeking investors willing to invest bitcoins...these websites were using bitcoins as a security."

As part of its investigation into BitcoinHYIP.org, investigators went undercover and deposited 1 BTC with the website in August. The complaint notes that the defendants, prior to the payment, assured investigators that their investments were safe and their returns guaranteed.

The filing continues:

"Thereafter, defendants BITCOINHYIP.ORG and YOUYOU FINANCE failed to and refused to transmit the promised investment return of three bitcoins, instantly or otherwise, or to return the bitcoin that I originally transmitted to them. That refusal has continued to the present."

Other elements of the report include a blockchain data analysis suggesting that bitcoins sent to the websites were never returned to their originating addresses.

The official complaint can be found below:

Images via BitcoinHYIP.org, Shutterstock

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