Thanks to crypto enthusiasts, the suspected scammers were caught on the spot.
Late Wednesday, internet sleuth and YouTuber Coffeezilla posted a new video documenting how he, along with members of the Blockchain community, brought down an alleged $20 million non-fungible token, or NFT, scam before that could be carried out. As Coffeezilla recounts, there was previously a lot of buzz among users about a new cryptocurrency project called “Squiggles,” which had an NFT auction scheduled for February 10. At the time, Squiggles had amassed more than 230,000 Twitter followers.
Hours before the expected auction, an anonymous user published a 60-page report claiming that the founders of Squiggles were paid puppets. At the same time, the real people behind the project allegedly belonged to a group of serial NFT scammers operating under the name “NFT Factory LA”.
How the fraud took place: Gavin, Gabe, and Ali out for a scam
Coffeezilla narrates, while citing the document, “Meticulously documents the allegations of NFT Factory LA, made up of ‘Gavin, Gabe and Ali’, behind not only Squiggles but various NFT scams. Among them are League of Sacred Devils, League of Divine Beings, Vault of Gyms, Sinful Souls, Dirty Dogs, Lucky Buddhas, and many more.”
The alleged series of frauds did not go unnoticed, however. Soon enough, Gavin, Gabe, and Ali were exposed by angry crypto enthusiasts for orchestrating the alleged rug-pulls. As a result, they needed to hire “stooges” to carry out work on future projects, such as Squiggles. However, before the night of the project’s $20 million auction, photos circulated on Instagram allegedly showing Squiggles founder Arsalan and Gavin together in the same Rolls Royce.
“Basically, these guys produce NFT projects that have the appearance of trust and quality. And then after launch, it turns out that they are nothing more than scams.”
They later appeared at the same club holding a sign that said “Squiggles Boys”, and then a photo appeared with Gavin, Gabe, and Ali in the same photo in the same place. “Quickly, people figure it all out,” Coffeezilla said. Hours after the launch, OpenSea pulled the project from the platform.
It appears that the alleged scammers also attempted to manipulate the volume of NFT sales. As Coffeezilla discovered, “[Via EtherScan] A single account spent 800 ETH [$2.384M], which is over $2M spread across two transactions that created hundreds of new wallets. These fake wallets then bought three NFTs from Squiggles and immediately listed on OpenSea for less money.”
The YouTuber explained that it was difficult to tell “if this resulted in a profit or a loss, either way, they were prevented from taking out the $20 million they could have made, and that’s a good thing.” In the blockchain, Coffeezilla exposes suspected scammers and alerts members to rug-pulls. Earlier this month, he posted an interview featuring disgraced YouTuber Ice Poseidon publicly refusing to return investor funds following an alleged $750,000 DeFi rug pull.
What do scammers do?
According to the media, fraudsters use sophisticated methods to try to hide their identities, including fake and stolen identities, fake addresses, unregistered prepaid mobile phones, virtual private networks (VPNs), fake bills, specialist HMRC said.
“Fraudsters tend to thrive where asset values inflate rapidly, so it’s not surprising to see them capitalizing on the growth of NFTs,” said Sam Roberts, a partner at law firm Cooke, Young, and Keidan, located in the United Kingdom.
By Audy Castaneda
