Department of Justice In New York Arrests Two 20-Year-Olds In Alleged $1.1M 'Rug Pull' NFT Scam

In what¡¯s being considered as one of the first actions federal authorities have taken to rein in the booming asset class of NFTs, the Department of Justice in New York has hit a pair of 20-year-olds with fraud and money laundering charges. The two youngsters are arrested for their alleged role in a $1.1 million scheme involving NFTs.

Where there is money to be made, fraudsters will look for ways to steal it, that¡¯s what U.S. Attorney for the Southern District of New York said yesterday.

But how did the two men, named Ethan Nguyen and Andre Llacuna, manage to carry out the million-dollar NFT scam?

DPA

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The ¡®Rug Pull¡¯ Scam

For the uninitiated, rug pulls are a form of scam in which a crypto developer promotes a new project, usually a new token to investors, and then disappears with the money quickly after selling the project/tokens, which in this case has been the $1.1 million NFTs.

As per the Department of Justice, the two men were charged in a criminal complaint with conspiracy to commit wire fraud and money laundering, in connection with a million-dollar scheme to defraud purchasers of NFTs advertised as ¡°Frosties.¡±

Nguyen and Llacuna promised investors the benefits of the Frosties NFTs, but when it sold out, they pulled the rug by almost immediately shutting down the website and transferring the money. So, they were allegedly selling bogus NFTs to investors before abandoning the project and absconding with $1.1 million in digital funds.

The pair face up to 20 years in prison in convicted.

The Department of Justice stated that instead of providing the benefits advertised to Frosties NFT purchasers, the two men transferred the cryptocurrency proceeds of the scheme to various cryptocurrency wallets under their control within hours of selling out the digital tokens.

Here are some tweets surrounding the scam.

Justice has been served Frostie Fam. All of us on Community Staff are overjoyed at the news that two people have been arrested for the rug pull we all endured back in January. More to come¡­ we are hopeful for some restitution! https://t.co/s0XXTiMrqK

¡ª Wrapped Frosties ? Official (@FrostiesNFTs) March 24, 2022

Yes! If you were a victim of the original Frosties rug pull - please reach out to the email address below! https://t.co/ZnGhDQZbBG

¡ª Wrapped Frosties ? Official (@FrostiesNFTs) March 24, 2022

The Two Men Were Set For A Bigger Scam

Prior to their arrests in Los Angeles, California, the two scammers were preparing to launch the sale of the second set of NFTs advertised as ¡°Embers¡± on 26th March 2022, i.e. tomorrow, which was anticipated to generate approximately $1.5 million in cryptocurrency proceeds. Certainly, their arrest seems to have prevented another huge NFT scam!

Also Read: Crazy For Crypto? 20 Terms You Must Know Before Investing In Cryptocurrency

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