The creators of ‘Frosties’ are on the list of the first NFT creators accused of “pulling out the rug” in a deceiving procedure that extracted more than $1 million from victims.
Two of the alleged creators of the non-fungible token (NFT) project ‘Frosties’got apprehended in the United States of America and would now face charges linked to money laundering and fraud.
Ethan Nguyen and Andre Llacuna, the pseudonymous creators of Frosties, got detained by the country’s law enforcement agencies in Los Angeles, California, for deceiving NFT investors of $1 million this year. The US Department of Justice (DOJ) revealed that the entity is acting against the pair of criminals for executing a “rug pull.”
Fraud, Money Laundering, and Lies
In 2022, Frosties used to be a collection of 8,000 NFTs that promised a range of advantageous features that usually come with this project, such as rewards and a metaverse game full of giveaways and other juicy features.
But the promises of ice cream-themed collectibles quickly got unveiled, as, after the sale took effect, their creators left the project and disappeared from the scene, leaving a high amount of losses among their victims.
US Attorney Damian Williams highlighted in the DOJ press release that Mr. Nguyen and Mr. Llacuna made investors a considerable amount of promises linked to the supposed benefits of Frosties NFTs.
Still, when they ran out, they pulled the rug out from under the victims almost in the blink of an eye, suspending the website and migrating the funds to unknown accounts, leaving behind a disastrous loss among the investors that believed in them.
The accused migrated approximately [USD]$1.1 million in cryptocurrency funds from the scheme to various wallets under their power in multiple transactions designed to obfuscate the source of funds.
The pair highlighted another NFT project named “Embers,” which got scheduled to see the light on Saturday this week. The duo expected to collect at least $1.5 million from the initiative, according to the report. As Vice revealed in a review, the ‘Embers’ Twitter account is still operative, with their most recent tweet posted 20 hours ago showing a lottery to enter the token pre-sale. That account counts more than 60,000 active followers.
DOJ’s first “carpet pull” case
Prosecutors in the Southern District of New York have charged both founders with wire fraud and conspiracy to commit money laundering in what appears to be the first criminal case prosecuted for an NFT “rug pull.” The charges in question count to a maximum of 20 years in prison.
Thomas Fattorusso expressed that his team focuses its efforts on digital assets, noting that NFTs also follow the same rules.
The individuals allegedly hid behind online pseudonyms. They promised investors huge rewards, giveaways, and exclusive chances before implementing their ‘rug-pulling’ strategy, leaving investors empty pockets and zero investment.
A rug pull speaks about a scenario in which the creators of a digital asset or NFT ask for funds from investors and suddenly abandon the project withholding. In various cases, the founders get to delete the social network profiles and thus vanish every trace from the Internet.
By: Jenson Nuñez
