The Justice Department said Thursday that It has charged two individuals with conspiracy to commit fraud and conspiracy to launder money in connection with the NFT token scam known as Frosties.
According to the Ministry of JusticeIt states that Ethan Nguyen and Andre Llacuna allegedly escaped with the money they received during the NFT sale rather than continuing to develop the project. This was one of the first cases involving NFTs.
“Since around January 2022, the IRS-CI and HSI have been investigating NFT fraud schemes based on reports from buyers Frosties NFT that they have been defrauded in what is known as a “Rug Pull,” referring to situations in which NFT project creators and/ or games to get investments from those who want to invest Then abruptly abandoned the project and fraudulently stolen the investor’s funds.
The DOJ further alleges, “NGUYEN and LLACUNA abandoned the Frosties NFT project within hours of the Frosties NFT sale, deactivating the website and transferring approximately $1.1 million in cryptocurrency to various crypto wallets under their control to confuse the source of funds.”
“Before the two of them were arrested in Los Angeles, California, both NGUYEN and LLACUNA were preparing to launch a second NFT sale advertised titled “Embers,” which is expected to create Another income of about $1.5 million.”
Both defendants could face decades in prison in connection with the allegations.
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