Skip to main content
Menu Icon

InfoBytes Blog

Financial Services Law Insights and Observations

New York Attorney General sues crypto companies, alleging billion-dollar pyramid scheme targeting immigrant communities

State Issues State Attorney General Cryptocurrency Fraud Martin Act New York

State Issues

On June 6, New York Attorney General Letitia James announced legal actions against two companies (with the same founders) for allegedly participating in illegal pyramid schemes. The complaint alleged these schemes defrauded hundreds of thousands of investors, including more than 11,000 New Yorkers, out of more than a billion dollars in crypto-assets. The AG alleged that the companies’ activities specifically preyed upon immigrant communities, notably New Yorkers of Haitian descent, using prayer groups and digital communication channels like social media to make false promises of high returns.

According to the complaint, one of the companies offered fraudulent returns from mining cryptocurrency, but never delivered on the promised profits and bonuses, eventually collapsing in 2019. The complaint then alleged the promoters of the collapsed company founded a new company that also promised high returns and bonuses.  According to the complaint, from 2019 to 2023, investors deposited more than $1 billion worth of cryptocurrency into the new company, yet a minuscule fraction (less than $26 million) was actually used for trading on the company’s platform before its collapse in May 2023.

The Attorney General’s legal action will seek a permanent ban on the company and the associated individuals from conducting any securities or commodities business within New York and disgorgement and damages for the victims.