As crypto use has become more widespread, the global crypto fraud economy has exploded in size
By the time Alona Katz hurried home from her office in downtown Brooklyn late on Oct 6, the trap was already set. After months of planning, the chief of Brooklyn’s crypto fraud unit was about to orchestrate one of the most sweeping international crackdowns a local prosecutor’s office had ever attempted. The operation, which took place across three time zones, was the culmination of a chase Katz had begun almost as soon as she was appointed chief of Brooklyn District Attorney’s Virtual Currency Unit three years ago. At 2am, dozens of servers that Katz’s team had targeted started going down. She would get no sleep that night.
In 2025, reported US losses from cryptocurrency fraud reached $11.4 billion, roughly triple from three years earlier, according to the FBI. Frustrated as the number of fraud victims soared, Gonzalez decided to set up a special unit to handle it, and hired Katz in 2023 from the Manhattan DA’s cybercrime and identity-theft bureau. Because the NYPD didn’t understand the scams, Eric Gonzalez, the Brooklyn District Attorney, said in an interview, before the Brooklyn DA opened the VCU office, victims who sought help from the New York Police Dept were often told to go elsewhere. Because transactions are recorded on a public ledger, or blockchain, allowing those with suitable software to follow money between wallets, crypto’s transparency aids investigators.
“I was the black sheep for going to law school,” she said. As crypto use has become more widespread, the global crypto fraud economy has exploded in size. Katz, in her 40s, doesn’t have a background in computer programming. She reads poetry, and most of her family are artists. Her phone lit up as soon as she started her new job. Katz soon noticed a pattern in the calls coming into her office. Many victims were from Brighton Beach and Sheepshead Bay, Brooklyn communities heavily populated by Russian and Ukrainian immigrants. The scammers, who typically conversed in Russian, identified themselves as fellow immigrants who’d found success trading in the US. The cons were simple. Scammers contacted victims on social networks and persuaded them to invest a few hundred dollars in crypto trades. Small withdrawals were allowed but when victims tried to cash out, they were charged costly fees or ghosted. Katz spent most working hours watching Bitcoin and Tether tokens move between digital wallets, learning the contours of vast underground international fraud networks and how to stop them. Over months, Katz and her team identified websites the scammers had set up, and moved to shut them down. Patterns they unearthed include similar branding by these sites, which exposed a cyber infrastructure located in Eastern Europe, including Ukraine. But site seizures proved temporary. Seeking a lasting impact, Katz’s team has developed undisclosed methods to identify servers underpinning the scams. Bloomberg You use AI every day. Now get your AI Quotient. Take the AIQ test.