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Two US males arrested for $1.5 million Frosties NFT ‘rug pull’ scheme

Two US males arrested for .5 million Frosties NFT ‘rug pull’ scheme

MANHATTAN (REUTERS) – Two males have been arrested and charged with scamming consumers of non-fungible tokens (NFTs) value US$1.1 million (S$1.49 million), authorities stated on Thursday (March 24), in what gave the impression to be the primary United States federal prison case involving the category of digital belongings whose recognition exploded final 12 months.

US Lawyer Damian Williams in Manhattan stated in a press release that Ethan Vinh Nguyen, 20, and Andre Marcus Quiddaoen Llacuna, 20, had been arrested in Los Angeles, California on Thursday.

They face expenses of wire fraud and conspiracy to commit cash laundering in reference to a million-dollar scheme to defraud purchasers of NFTs marketed as “Frosties”, which depicted snowman-like characters.

Frosties purchasers have been instructed they’d be eligible for holder rewards, resembling giveaways and early entry to a metaverse sport.

However on or round Jan 9 this 12 months, Nguyen and Llacuna deserted the undertaking and transferred US$1.1 million in cryptocurrency proceeds from the scheme to numerous cryptocurrency wallets beneath their management, prosecutors stated.

Such schemes are often known as a “rug pull”. An lawyer for Nguyen didn’t instantly return a request for remark. Lawyer data for Llacuna was not instantly obtainable.

The NFT market, made up of distinctive digital belongings that may symbolize a collectible picture, gaming character, or a plot of land in a digital world, reached some US$25 billion in 2021.

“The place there may be cash to be made, fraudsters will search for methods to steal it,” Mr Williams stated in a press release.

Prosecutors stated Nguyen and Llacuna had launched the Frosties undertaking utilizing pseudonyms, and had been planning a second sale of NFTs referred to as “Embers” earlier than they have been arrested.

The US Justice Division just lately signalled an elevated deal with crimes associated to digital belongings by forming a nationwide cryptocurrency enforcement workforce.

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