The duo who scammed $1.1 million from the NFT project was arrested

After collecting $1.1 million from the NFT Frosties collection, Ethan Nguyen and Andre Llacuna suddenly disappeared and withdrew all capital from the project.

The US Department of Justice has just announced the arrest of the creator of NFT Frosties for fraud and money laundering in the form of “rug pull”. Accordingly, Ethan Nguyen and Andre Llacuna are accused of more fraud 1.1 million USD by selling his cartoon character NFT Frosties.

Run away after selling 8,888 NFT

After selling the collection, the two immediately shut down the project and transferred the proceeds to various crypto wallets, leaving the group of Frosties buyers with worthless NFTs.

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Joshua Christian, the victim of the scam, spent $1,000 to buy 3 NFT Frosties, then lost everything because the founder ran away. Photo: Joshua Christian.

The indictment points out that the Internal Revenue Service (IRS-CI) and the Department of Homeland Security (HSI)’s Criminal Investigation Division had been investigating the Frosties project since January, shortly after receiving a complaint from the buyer.

Within 1 hour of the announcement, the Frosties project sold out 8,888 NFT, paid in ETH with an average value of each copy. 130 USD. But soon after, these founders immediately “put their children out of the market”, disappeared and stopped working on the project.

Collectors who resell this NFT set also receive only a few dollars and have given up hope of promising gifts such as 3D avatar versions and video game Frosties. Some members of the group that were scammed even tried to revive the Frosties project and build their own set of NFTs.

The two young men behind the Frosties project were taken into custody in Los Angeles, California.

Follow the trail

The complaint also includes an apology and confession from Ethan Nguyen to the Frosties buyer community manager on Discord.

“Even though I know this news is shocking, I still have to announce that this project has ended. I have no intention of continuing to develop Frosties and have no plans in the future,” he wrote. Ethan Nguyen also sent a small amount in ETH to the manager for the trouble he caused and advised him to delete his Discord account.

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Frosties is one of the first “rug pull” scams in 2022. Photo: OpenSea.

The two scammers are also planning to start a new project called Embers, which is due to be announced in March. This project includes a charity fund worth 50,000 USD and 1 community wallet holding 1/4 of the revenue.

In addition, the investigating agency also found a Coinbase account corresponding to Ethan Nguyen’s IP address and Andre Llacuna’s email and phone number. These 2 accounts are linked to Citibank credit cards and identification documents. This has helped the investigating agency to track down the two criminals, and at the same time detect the transactions of Nguyen and Llacuna in the NFT Frosties scam.

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The letter is believed to be from Ethan Nguyen to the community manager.

Rug pull or “carpet pull” is the word for developers who suddenly take investors’ money and leave the project after launch. This form of scam is gradually becoming popular in the crypto world. According to AFR“rug pull” cases in 2021 have caused more losses 3 billion USD.

However, the number of fraud cases turned into investigative cases is still very small. According to The Vergeone of the reasons is that the people behind NFT projects often do not reveal their true identities.

The proof is the identity of the person behind the expensive Bored Ape Yacht Club collection worth up to $2.8 billion is still a mystery. On the other hand, profitable NFT projects are constantly being launched and gradually becoming a phenomenon while still being transparent about the legality.

It is worth noting that the US Department of Justice has yet to make an official statement on whether the Frosties project is a scam. “NFT is a whole new area of ​​investment but the rules are similar to regular real estate transactions,” said IRS-CI special agent Thomas Fattorusso. However, it is wrong to call for investment funds for business purposes but then abandon them and disappear with the proceeds, he added.

(According to Zing)

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