NFT Rug Pull: DOJ Charges Two People in Million-Dollar Scheme to Defraud Investors

March 26, 2022

The U.S. Department of Justice (DOJ) has charged two folks allegedly behind a million-dollar non-fungible token (NFT) “rug pull” scheme. They deserted the NFT challenge inside hours after promoting out, deactivated the web site, and transferred over $1 million in crypto to the wallets they managed, the justice division defined.

NFT Purchasers Defrauded in a Rug Pull Scam

The U.S. Justice Department introduced Thursday that two 20-year-olds have been charged in a “non-fungible token (NFT) fraud and money-laundering scheme.” The defendants, Ethan Nguyen and Andre Llacuna, allegedly defrauded purchasers of NFTs marketed as “Frosties.”

According to the DOJ, on or about Jan. 9, the defendants “deserted the Frosties NFT challenge inside hours after promoting out of Frosties NFTs, deactivated the Frosties web site, and transferred roughly $1.1 million in cryptocurrency proceeds from the scheme to numerous cryptocurrency wallets below their management in a number of transactions designed to obfuscate the unique supply of funds.”

U.S. Attorney Damian Williams mentioned:

Mr. Nguyen and Mr. Llacuna promised buyers the advantages of the Frosties NFTs, however when it bought out, they pulled the rug out from below the victims, virtually instantly shutting down the web site and transferring the cash.

Nguyen and Llacuna have been arrested in Los Angeles, California, as they ready to promote a second set of NFTs marketed as “Embers,” the DOJ famous.

The Justice Department believes that Embers is “one other fraud scheme,” noting that it was anticipated to launch on or round March 26 and anticipated to generate roughly $1.5 million in cryptocurrency proceeds.

The defendants “are every charged with one depend of commit wire fraud … and one depend of conspiracy to commit cash laundering,” the DOJ mentioned, noting that every depend carries a most sentence of 20 years in jail.

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