Brooklyn District Attorney Eric Gonzalez made a significant announcement on Friday. His Virtual Currency Unit has taken a major step in combating cryptocurrency scams that have been preying on artists across the United States. This investigation, led by a dedicated team from the DA’s office, began with a heartbreaking case involving an 85-year-old Brooklyn painter who was defrauded of his life savings. Through meticulous tracing, the scheme was linked to Nigeria and a total of 40 fraudulent NFT marketplace websites were identified.

Protecting Artists from Cryptocurrency Scams

Investigation Beginnings

The probe initially started in May when the children of a Clinton Hill resident came forward with the distressing news of their father’s financial and emotional devastation. This professional painter had been contacted through LinkedIn by an alleged art dealer claiming to represent “OpenSea/Private Mint,” which was actually a counterfeit version of the legitimate NFT marketplace OpenSea. The scammer managed to convince the victim to sign a contract to mint his art as NFTs. Later, the scammer falsely claimed that the NFTs had generated $300,000 in bitcoin but demanded that the victim pay fees to access the proceeds. In a desperate attempt to recover his supposed earnings, the painter liquidated his IRA, maxed out his credit cards, and took out a loan to send over $135,000 in cryptocurrency to the fake platform. However, the promised payout never materialized, leaving the victim in a state of financial ruin.The Virtual Currency Unit was able to trace the victim’s payments to accounts at a cryptocurrency exchange. It was discovered that the funds were primarily converted to Nigerian currency, making recovery an almost impossible task. Investigators further linked the scam to a network of 40 fake NFT marketplace websites. Some of these sites tricked users into entering their cryptocurrency wallet seed phrases, allowing the scammers to drain entire accounts.Although the stolen funds could not be recovered, the DA’s office was able to obtain court orders to seize the 40 fraudulent domains. These sites now redirect to a seizure notice, warning users about the scam.

Protecting Artists

District Attorney Gonzalez emphasized that this scheme targeted artists nationwide and exploited their trust in emerging digital markets. By taking these sites offline, the DA’s office is not only stopping future harm but also educating the public. They have provided valuable tips to help artists and the public avoid similar scams. It is crucial to verify the legitimacy of art dealers and NFT marketplaces. Only use trusted NFT platforms and avoid sites that require high upfront fees. Never share your cryptocurrency wallet seed phrase and be wary of offers that seem too good to be true. These precautions can help safeguard against falling victim to such scams.