The US Justice Division introduced that two males have been charged with conspiracy to commit wire fraud and cash laundering “in reference to a million-dollar scheme to defraud purchasers of NFTs marketed as Frosties.”
The suspects, Ethan Nguyen and Andre Llacuna, had been accused of mendacity about advantages promised to NFTs consumers and withdrawing the cryptocurrency proceeds out of the Frosties account by a number of transactions.
Their real-life identities had been disclosed after investigators appeared into the related file of transactions completely saved on Ethereum’s blockchain and analyzed the related transfers to accounts on Coinbase.
$1.1 Million NFT Challenge Rugpulled
In accordance with the legal grievance released by the court docket, on January 9, 2022, a complete of 8,888 Frosties tokens value roughly $1.1 million had been bought out 48 minutes after the general public sale had gone dwell. Every NFT went for 0.04 ETH, at the moment equal to round $130.
The grievance identified that roughly three hours after the sale, “the proceeds of the Frosties NFT sale that had been transferred to Frosties Pockets Tackle-1 had been then transferred to a separate cryptocurrency pockets tackle (“Fraud Pockets Tackle-1″).” In whole, 356.56 ETH was despatched to the “Fraud pockets tackle,” as later recognized by the investigators.
Additionally, as indicated by the DOJ’s press launch, Nguyen and Llacuna didn’t present advantages as marketed to the NFT consumers and transferred the cryptocurrencies to wallets beneath their management.
Figuring out the Suspects Behind the Scheme
IRS-CI Investigators matched Nguyen and Llacuna’s IP addresses used for selling Frosties on Discord with corresponding accounts on Coinbase. The KYC necessities imposed by the US alternate to its clients allowed legislation enforcement to determine the identities of the account holders.
Investigators tracked down the actions related to the fraud pockets tackle and efficiently recognized transfers performed between the Coinbase accounts and the fraud pockets linked to Frosties funds.
Earlier than Nguyen and Llacuna had been arrested in Los Angeles, they had been making ready to launch a follow-up NFT rip-off known as “Embers.” It was presupposed to go dwell round March 26, 2022, and generate further income as much as $1.5 million in digital belongings.
Charged with fraud and cash laundering, Nguyen and Llacuna are thought-about the early indicator of US legislation enforcement ramping up its sources and instruments concentrating on NFT rug pulls.
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