Frosties NFT: 20-Year-Old Founders Arrested On Suspicion Of Fraud

The picture depicts a Frosties NFT
The U.S. Department of Justice arrested two 20-year-old men with fraud and money laundering over a “rug pull” scheme. The accused persons are Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacua, the people behind the NFTs called “Frosties”. Both are facing a maximum of 40 years in prison.
A rug pull scheme happens when the creator of an NFT or gaming program solicits investments. After that, they suddenly abandon the project while retaining the investors’ funds.
The picture depicts a Frosties NFT

Frosties: The first U.S. arrest linked to an NFT rug pull.

The Frosties Rug Pull History and Arrest

Last January 9, Nguyen and Llacua raised $1.1 million in selling the NFTs. The ice-cream-themed project Frosties was a popular collection composed of 8,888 NFTs. The project was sold out within an hour after the public launch, with each NFT priced at the Ethereum equivalent of around $130.
The accused abandoned the project after a few hours of selling out the Frosties NFTs. Then they deactivated the Frosties website. The pair shut down the project without delivering what they promised for the Frosties holders.
They promised holders with awards, including giveaways to those who purchased their NFTs. In addition, early access to a metaverse game and exclusive mint passes to upcoming Frosties seasons.
Investigators matched Nguyen and Llacuna’s Discord account data which includes their IP address, email address, and phone number to their corresponding accounts on the Coinbase cryptocurrency exchange. The accounts were connected with a government ID and Citibank credit card that the law enforcement used to track them down.
Investigators also traced a series of transfers that the pair allegedly used to obscure where they were sending the Frosties funds.
Before their arrest, Nguyen and Llacua advertised another NFT project under the name of “Embers.” The second NFT collection seems similar to the Frosties NFT and is expected to be launched on March 26. 
The picture shows the Roadmap of Embers NFT Project

The Frosties founders advertised another NFT project under the name of “Embers”.

NFTs Are Subject to the Law

According to Thomas Fattorusso, a criminal investigation agent-in-charge for the Internet Revenue Service: “NFTs represent a new era for financial investments. But, the same rules apply to an investment in an NFT or a real estate development.”
“You can’t solicit funds for a business opportunity, abandon that business and abscond with money investors provided you,” Fattorusso added.
Each of the accused pair received charges of one count of committing wire fraud, which carries a maximum sentence of 20 years in prison. They also received one count of conspiracy to commit money laundering, which also carries a maximum sentence of 20 years in prison.
U.S. Attorney Damian Williams said that “where there is money to be made, fraudsters will look for ways to steal it”. This is entirely true in the NFT market.
Scammers have targeted the NFT market, using fear of missing out as a way to cash in on investors. Just in the past three months, there had been several rug pull allegations. There’s Neonexus, Balloonsville, CryptoSis, and Blockverse to name a few.
What happened to the Frosties project would hopefully repel scammers from using NFTs. As the NFT industry grows, more countries will probably implement stricter regulations when it comes to digital assets. Even so, NFT enthusiasts should still remain vigilant when they invest in NFT projects.

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