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The DOJ Goes After Its First Rug Pull

Date:


March 25, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits ✍✍✍

  • Staking ETH will most likely yield 10-15% APY after The Merge.

  • The SEC delayed its decision on WisdomTree and One River’s spot bitcoin ETF proposals.

  • Digital asset investment products saw an outflow of capital for the second consecutive week.

  • SushiSwap partnered with Moonbeam to make the decentralized exchange available on Polkadot.

  • Nearly $6 billion in ETH has been burned since EIP-1559’s introduction.

  • Tennis star Naomi Osaka has partnered with FTX to bring more women into crypto.

Today in Crypto Adoption…

  • A Goldman Sachs survey shows that 60% of clients expect to increase digital asset holdings over the next one to two years.

  • BlackRock CEO Larry Fink said the massive asset manager is studying digital assets in an investor letter.

  • A Russian lawmaker hinted that the country would accept BTC for oil payments.

  • Exxon Mobil is running a pilot project that supplies excess natural gas to bitcoin miners.

  • The Bank of England published a framework for regulating cryptocurrency.

  • Diplo will tokenize his next single on Royal.

The $$$ Corner…

  • Slow news day!


What Do You Meme?

The DOJ Goes After Its First Rug Pull Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI


What’s Poppin’?

DOJ Goes After NFT Rug Pull Creators

 

The US Department of Justice charged two men with conspiracy to commit wire fraud and conspiracy to commit money laundering in connection with the NFT collection Frosties.

Frosties founders Ethan Nguyen and Andre Llacuna allegedly transferred the cryptocurrency proceeds from the NFT sale to various wallets under their control, claims the DOJ. Furthermore, before their arrest, the two were set to launch a new project, dubbed “Embers,” that was expected to mint $1.5 million in additional funds for the duo.

In a press release, U.S. Attorney Damian Williams explained that “Mr. Nguyen and Mr. Llacuna promised investors the benefits of the Frosties NFTs, but when it sold out, they pulled the rug out from under the victims, almost immediately shutting down the website and transferring the money. Our job as prosecutors and law enforcement is to protect investors from swindlers looking for a payday.”

In a later quote, the DOJ described Frosties as a ‘rug pull,’ marking the first instance of the crypto-centric term being used by the DOJ in a press release (based on available records online). The regulator defined a rug pull as  “a scenario where the creator of an NFT and/or gaming project solicits investments and then abruptly abandons a project and fraudulently retains the project investors’ funds.”

Overall, the DOJ claims that Nguyen and Llacuna stole approximately $1.1 million in cryptocurrency from the scheme. The DOJ also included a screenshot of the Frosties game in its report, which, coming from a regulator, is somewhat humorous:

The DOJ Goes After Its First Rug Pull Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI

Nguyen and Llacuna could face a maximum sentence of 20 years in prison


Recommended Reads

  1. Joel John on aggregation theory:

The DOJ Goes After Its First Rug Pull Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI

  1. N.S. Lyons on CBDCs and a potentially dark future:

The DOJ Goes After Its First Rug Pull Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI

  1. Paradigm on token compensation:

The DOJ Goes After Its First Rug Pull Blockchain PlatoBlockchain Data Intelligence | Vertical Search AI


On The Pod…

The Chopping Block: Do Kwon Pitches a Decentralized NFT Publishing Service

Welcome to The Chopping Block! Crypto insiders Haseeb Qureshi, Tom Schmidt, and Robert Leshner chop it up about the latest news in the digital asset industry. On this week’s episode, Do Kwon, founder of Terraform Labs, also dropped by. Show topics:

  • why Do decided to make millions of dollars in bets that LUNA will appreciate in value next year

  • what Robert and Do, as crypto/DeFi founders, think about Crypto Twitter

  • how the difficulty of building payment systems led to Do launching Terra

  • Gauntlet’s recent funding round (and what it does)

  • takeaways from Yuga Labs purchasing CryptoPunk and Meebits IP, ApeCoin, Otherside, and more

  • how NFTs could change the game publishing and content IP industries

  • whether an NFT collection’s cultural relevance is similar to an L1’s TVL

  • Bored Ape Yacht Club as the first NFT franchise

  • why Haseeb is so disappointed with Axie Infinity, VCs, and other P2E games

  • what Facebook’s foray into NFTs might look like


Book Update

My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!

You can purchase it here: http://bit.ly/cryptopians

The post The DOJ Goes After Its First Rug Pull appeared first on Unchained Podcast.

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