For their roles in a $1.1 million NFT scam, the Department of Justice charged two 20-year-olds with fraud and money laundering. It is one of the first steps taken by federal authorities to rein in the burgeoning asset class.
The project was dubbed “Frosties” by Ethan Nguyen and Andrew Llacuna, both of Los Angeles, and promised investors future giveaways, more tokens, and a metaverse game based on the brand.
Prosecutors claim the duo engaged in a “rug pull” in January, in which they advertised Frosties on social media and then vanished with the money they earned.
“Wherever there’s money to be earned, fraudsters will find a way to get it,” said Damian Williams, a US attorney in New York.
Frosties- the cute NFT scam
Ethan Nguyen and Andre Llacuna are accused of making $1.1 million selling non-fungible tokens (or NFTs) based on the cartoon character “Frosties.”
They shut down the initiative and shifted its cash to a variety of different crypto wallets after selling the NFTs, leaving Frosties owners without the promised benefits.
The Internal Revenue Service, Criminal Investigation (IRS-CI), and Homeland Security Investigations (HSI), according to the criminal complaint, began investigating Frosties in January, immediately after receiving complaints about the fraud.
Frosties was a popular initiative, with 8,888 NFTs (equal to $130 in Ethereum) selling out within an hour of its public introduction.
It was quickly abandoned by the creators. When buyers sought to resell their NFTs, they only received a few bucks, and they gave up all prospects of seeing future promised benefits, such as 3D copies of their avatars and a Frosties video game.
(However, some con artists in the community sought to resuscitate the Frosties as a different NFT lineup.) Frosties’ two perpetrators have since been apprehended in Los Angeles, California.
“Hello, Garry. This project is coming to a close, which I realize is startling. I had no intention of continuing the project, and I have no plans for the future. As a result, the project is drawing to a close. You were a fantastic moderator with a big heart” – An alleged message from Ethan Nguyen to a Frosties community moderator.