‘Frosties’ NFT Series Creators Arrested in US Over ‘Rug Pull’ Scam

US prosecutors have charged two males with cash laundering and fraud with their NFT collection known as ‘Frosties’. Ethan Nguyen and Andre Llacuna pocketed $1.1 million (roughly Rs. 8 crore) earlier than abandoning their NFT mission and leaving patrons excessive and dry in phrases of promised advantages. Such cases come beneath the ‘rug pull’ rip-off class the place creators of NFT initiatives or cryptocurrencies accumulate fast gross sales and disappear. Rug pull scams are one of the crucial widespread methods how infamous entities dupe unsuspecting, harmless buyers.

The US Division of Justice (DoJ) had been sniffing round for ‘Frosties’ creators after a grievance was reported earlier this yr. The 2 20-year-old creators have been arrested in Los Angeles, California on March 24.

“Rather than providing the benefits advertised to Frosties NFT purchasers, Nguyen and Llacuna transferred the cryptocurrency proceeds of the scheme to various cryptocurrency wallets under their control,” the DoJ mentioned in a statement.

NFTs or non-fungible tokens are blockchain-built digital collectibles. They might be impressed by something — music, meals, cartoons, animals, movies, and artworks, amongst different issues. Whereas NFTs maintain resale values, they typically additionally deliver alongside rewards for his or her homeowners.

Frosties purchasers have been promised holder rewards similar to inter alia, giveaways, early entry to a metaverse game, and unique mint passes to imminent Frosties seasons.

The Discord server of those NFTs depicting distinctive cartoonised characters disappeared on January 9, simply hours after the general public minting of those digital collectibles went reside. The flip of occasions raised suspicion among the many NFT neighborhood.

Later, a cryptic tweet saying “I’m sorry,” was posted on the Twitter deal with of Frosties earlier than it was deleted, a report by Protocol said.

The rip-off assortment that provided 8,888 distinctive cartoon characters created fairly a buzz round January and continues to be showing on OpenSea NFT marketplace. Its web page reveals over 2,000 patrons who now personal a number of Frosties NFTs.

Each Nguyen and Llacuna have been gearing as much as launch the sale of their second NFT assortment titled ‘Embers’. The digital collectibles from this assortment have been estimated to boost round $1.5 million (roughly Rs. 11.5 crore).

Nguyen and Llacuna are “each charged with one count of commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison”.

The sentencing of the defendants could be decided by the assigned decide, the DoJ has famous.

Rug pulls took in greater than $2.8 billion (roughly Rs. 21,333 crore) value of cryptocurrency from rip-off victims final yr, a report by Chainalysis mentioned in December final yr.

The identical report had additionally claimed that crypto scams mooched off over $7.7 billion (roughly Rs. 58,697 crore) from buyers final yr.

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