Frosties NFT Scammers Arrested, Charged with Fraud and Money Laundering
Non-fungible tokens have gained enough traction and popularity for almost any scammer to try and get in on the action. However, for two of those, things didn't go too well.
After launching an NFT project named Frosties, raking up just over a million dollars in cryptocurrency from hopeful enthusiasts and then pulling the rug from under customers' feet and vanishing along with the project, its two authors have been arrested by the US authorities.
A garden-variety rug-pull scam
Ethan Nguyen and Andre Llacuna were the two "masterminds" behind the Frosties NFT project. On paper, Frosties was supposed to deal in cool cartoon art to be traded as non-fungible tokens or NFTs. However, in reality, after investors dumped roughly $1.1 million in the project, the operators vanished overnight, taking down the Discord server dedicated to Frosties with them and only leaving a brief "I'm sorry" message on the project's Twitter account before that was taken down as well.
US law enforcement stated that the million dollars in crypto was siphoned to a number of different wallets, in what looks like an attempt to launder the funds by bouncing them around enough times, using stealth transactions.
To add insult to injury, ThreatPost reported that the pair of NFT entrepreneurs who got arrested were preparing to launch a second NFT project under the name Embers. The launch was scheduled for later this week but is obviously not happening after the arrests. US law enforcement believes that if Embers was realized, it would have netted the pair an estimated further $1.5 million in crypto.
Frosties not first NFT scam
To a more level-headed observer, something like this was bound to happen sooner rather than later, given the ample opportunities for fraud that NFTs offer. NFT scams follow in the steps of crypto scams that netted scammers nearly $3 million in the last year.
Frosties isn't the first NFT rug-pull scam of this kind either. Back in 2021, the authors of the Iconics NFT project took off with about $150,000 in tokens - a much more modest sum.
Nguyen and Llacuna, both 20 years old, are facing wire fraud and money laundering charges, both of which could lead to a maximum sentence of 20 years in prison.