US Department of Justice Arrested Founders of NFT ‘Frosties’ for “Rug Pulling”

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US Department of Justice Arrested Founders of NFT 'Frosties' for "Rug Pulling" By Hannah Perez

The ‘Frosties’ founders are among the first NFT creators to be indicted for “pulling out the rug,” in a scheme that stole more than a million dollars.

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Two of the alleged creators behind the infamous project of tokens non-expendable property (NFT) ‘Frosties’ were arrested in the United States and are facing charges for money laundering and wire fraud.

The country’s law enforcement agencies arrested Ethan Nguyen and Andre Llacuna, the alleged pseudonymous creators of frostiesin Los Angeles, California, for having defrauded NFT investors of $1 million at the beginning of the year. The US Department of Justice (DOJ) reported in a release that he is taking action against the duo for having made a “carpet pull“.

US Department of Justice Arrested Founders of NFT 'Frosties' for "Rug Pulling"
The Frosties collection can still be found in the NFT marketplace Open Sea

Fraud and money laundering charges

Launched in early 2022, frosties it was a collection of 8,000 NFTs that promised a range of usual features in this type of project, such as rewards and a metaverse game with gifts and other benefits. But the promises of ice cream-themed collectibles quickly faded, as after the sale their creators abandoned the project and disappeared from the Internet.

Mr. Nguyen and Mr. Llacuna promised investors the benefits of Frosties NFTs, but when they ran out, they pulled the rug out from under the victims, almost immediately shutting down the website and transferring the money.said US Attorney Damian Williams in the DOJ news release.

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Then “transferred approximately [USD]$1.1 million in cryptocurrency proceeds from the scheme to various cryptocurrency wallets under his control in multiple transactions designed to obfuscate the original source of funds“, added the authorities.

Don’t settle for that, the couple had announced a second NFT project called “embers“, which was scheduled to launch on Saturday this week. According to the report, the duo hoped to raise $1.5 million from the initiative. as reviewed Vicehehe ‘Embers’ Twitter account is still active, with his most recent tweet posted 20 hours ago announcing a lottery to enter the token presale. That account has more than 60,000 followers.

Nguyen and Llacuna worked under various aliases, including “Frostie,” “Jakefiftyeight,” “Jobo,” “Joboethan,” “Meltfrost,” and “heyandre,” according to the report.

DOJ’s first “carpet pull” case

Prosecutors in the Southern District of New York have charged both founders with wire fraud and conspiracy to commit money laundering, in what appears to be the first criminal case prosecuted for an NFT “rug pull.” Each of the charges carries a maximum sentence of 20 years.

IRS-CI Special Agent in Charge Thomas Fattorusso warned in the statement that his team is keeping a close eye on cryptocurrencies, noting that the rules also apply to NFTs.

The arrested crooks allegedly hid behind online identities where they promised investors rewards, giveaways and exclusive opportunities before implementing their ‘rug-pulling’ scheme, leaving investors with empty pockets and no legitimate investment. The HSI New York Cryptocurrency and Dark Web Task Force worked closely with our IRS-CI partners to identify and take down these scammers as they prepared to launch the sale of yet another NFT project that likely would have scammed many others.

It should be noted that the concept of “rug pull” refers to a scenario in which the creators of a cryptocurrency or NFT project make a sale or request money from investors and then abruptly leave the project withholding. fraudulently funds. In many of these cases, the founders choose to delete the social network accounts and thus disappear from the Internet.

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Article by Hannah Estefanía Pérez / DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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