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The US Justice Division introduced that two males have been charged with conspiracy to commit wire fraud and cash laundering “in reference to a million-dollar scheme to defraud purchasers of NFTs marketed as Frosties.”
The suspects, Ethan Nguyen and Andre Llacuna, have been accused of mendacity about advantages promised to NFTs patrons and withdrawing the cryptocurrency proceeds out of the Frosties account by way of a number of transactions.
Their real-life identities have been disclosed after investigators appeared into the related report of transactions completely saved on Ethereum’s blockchain and analyzed the related transfers to accounts on Coinbase.
$1.1 Million NFT Challenge Rugpulled
In response to the felony criticism launched by the courtroom, on January 9, 2022, a complete of 8,888 Frosties tokens value roughly $1.1 million have been offered out 48 minutes after the general public sale had gone stay. Every NFT went for 0.04 ETH, at the moment equal to round $130.
The criticism identified that roughly three hours after the sale, “the proceeds of the Frosties NFT sale that had been transferred to Frosties Pockets Handle-1 have been then transferred to a separate cryptocurrency pockets deal with (“Fraud Pockets Handle-1″).” In complete, 356.56 ETH was despatched to the “Fraud pockets deal with,” as later recognized by the investigators.
Additionally, as indicated by the DOJ’s press launch, Nguyen and Llacuna didn’t present advantages as marketed to the NFT patrons and transferred the cryptocurrencies to wallets beneath their management.
Figuring out the Suspects Behind the Scheme
IRS-CI Investigators matched Nguyen and Llacuna’s IP addresses used for selling Frosties on Discord with corresponding accounts on Coinbase. The KYC necessities imposed by the US trade to its prospects allowed legislation enforcement to determine the identities of the account holders.
Investigators tracked down the actions related to the fraud pockets deal with and efficiently recognized transfers performed between the Coinbase accounts and the fraud pockets linked to Frosties funds.
Earlier than Nguyen and Llacuna have been arrested in Los Angeles, they have been getting ready to launch a follow-up NFT rip-off referred to as “Embers.” It was imagined to go stay round March 26, 2022, and generate extra income as much as $1.5 million in digital belongings.
Charged with fraud and cash laundering, Nguyen and Llacuna are thought of the early indicator of US legislation enforcement ramping up its sources and instruments focusing on NFT rug pulls.
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