Two Arrested During Cryptocurrency Fraud Investigation

Two men from outside New York State were arrested Thursday following an undercover operation tied to an alleged cryptocurrency investment scam that authorities say targeted a Town of New Hartford business owner.

The arrests came after a lengthy investigation by the New Hartford Police Department into what investigators describe as a sophisticated fraud scheme involving cryptocurrency investments and large cash transactions. Police say the victim, a New Hartford resident who owns a local business, was persuaded through online communications and fraudulent investment platforms to transfer substantial sums of money.

Authorities believe the victim was then pressured to provide even more money under the false belief that the payments were connected to cryptocurrency investments.

According to investigators, members of the fraud operation were dispatched to New Hartford to collect cash in person from the victim.

That investigation led to an undercover operation on June 4 involving New Hartford Police, the FBI, Homeland Security Investigations, Immigration and Customs Enforcement, the Utica Police Department, the New York Mills Police Department and the Oneida County District Attorney's Office.

Around noon, investigators say Xingxuan Li of Chicago arrived at a local business in New Hartford to collect more than $50,000 in cash. Authorities allege Li was acting as a courier for the fraud enterprise and had traveled from Illinois specifically for the collection. Investigators said the organization arranged his flight to New York, provided a rental vehicle and scheduled a return flight for later that evening.

A few hours later, police say a second attempt was made to collect money from the victim.

At approximately 3:30 p.m., Xiaohui Lu of New York City was taken into custody after investigators determined he had traveled to New Hartford and allegedly attempted to obtain money connected to the same scheme.

Both men were arrested without incident following surveillance conducted by law enforcement.

Investigators also determined that Li and Lu are currently in the United States under pending asylum status. Federal authorities are expected to review their immigration status as the investigation continues.

"The public should be extremely cautious when dealing with online investment opportunities, especially those involving cryptocurrency," New Hartford Police said in a statement. "Anyone who arrives in person to collect large sums of money should be viewed as a major red flag. Legitimate investment professionals do not conduct business in that manner."

Li and Lu have each been charged with Attempted Grand Larceny in the Second Degree, a Class D felony, and Scheme to Defraud in the Second Degree, a Class A misdemeanor.

Li was arraigned in New Hartford Town Court and released pending future proceedings. Lu was arraigned in Oneida County Centralized Arraignment Part Court and was also released pending future court appearances.

Meanwhile, investigators believe the case may be connected to a larger criminal network involved in cryptocurrency fraud and financial exploitation across multiple states. Federal authorities continue to investigate, and additional arrests or charges could follow.

Police are reminding residents to verify the credentials of anyone offering investment opportunities and to be skeptical of requests involving wire transfers, cryptocurrency transactions or large cash payments. Information about investment professionals can be verified through the U.S. Securities and Exchange Commission at Investor.gov.

If there has been a change to this information, such as charges being dropped or dismissed, please email the author by clicking here to begin the process of making the necessary change.