Two Men Arrested For $1.1 Million ‘Frosties’ NFT Rugpull In The U.S.
According to the US Department of Justice (DOJ) two men have been charged with conspiracy to commit wire fraud and money laundering “in connection with a million-dollar scheme to defraud purchasers of NFTs advertised as Frosties.”
Ethan Nguyen and Andre Llacuna are accused of lying about benefits promised to NFT buyers and withdrawing the crypto funds out of the Frosties account through multiple transactions.
The real identities of the two men were discovered after investigators looked into the relevant record of transactions permanently stored on Ethereum’s blockchain and analyzed the associated transfers to accounts on Coinbase.
A criminal complaint reveals that a total of 8,888 Frosties tokens worth roughly $1.1 million were sold out 48 minutes after the public sale had gone live. Each NFT sold for 0.04 ETH, at that time equivalent to around $130.
According to the complaint, in just three hours after the sale, “the proceeds of the Frosties NFT sale that had been transferred to Frosties Wallet Address-1 were then transferred to a separate cryptocurrency wallet address (“Fraud Wallet Address-1″).” In total, 356.56 ETH was sent to the “Fraud wallet address,” as later identified by the investigators.
The DOJ notes that Nguyen and Llacuna did not provide benefits as advertised to the NFT buyers and transferred the cryptocurrencies to wallets under their control.
The investigators matched Nguyen and Llacuna’s IP addresses used for promoting Frosties on Discord with corresponding accounts on Coinbase. The KYC requirements imposed by the US exchange to its customers allowed law enforcement to figure out the identities of the account holders.
Investigators tracked down the activities associated with the fraud wallet address and successfully identified transfers conducted between the Coinbase accounts and the fraud wallet linked to Frosties funds.
Nguyen and Llacuna were arrested in Los Angeles. It appears that they were preparing to launch a new NFT scam called “Embers,” planned to go live around March 26, 2022, and generate additional revenue up to $1.5 million in digital assets.
Charged with fraud and money laundering, Nguyen and Llacuna case is an example that the US law enforcement stepping up its efforts to target NFT rug pulls.
