The US DOJ Charged Ethereum NFT project creators of Frosties for a “rug pull” and wire fraud as well as money laundering so let’s read further in today’s latest Ethereum news.
The US DOJ charged Ethereum NFT project creators for defrauding buyers of an NFT project. Andre Llacuna and Ethan Nguyen are the creators of Embers which was launched in January. The so-called NFT rug pulls the buyers who pour money into new projects but the nature of the crypto space doesn’t mean that the alleged scammers can disappear without consequences. The US DOJ announced that it charged a pair of 20-year olds Andre Llacuna and Ethan Nguyen with conspiracy to commit wire fraud and money laundering from the Frosties NFT project.
The creators of Frosties which is an ETH nft project that was launched In January sold 8,888 NFTs and banked about $1.1 million worth of ETH in the process with the creators then shutting down the project’s channel and appearing with the funds. The rug pull refers to an instance where the project’s creators sell NFTs based on false premises of future benefits and utility but then vanish with the funds. The NFTs lose value as a result.
Frosties started at just 0.001 ETH on the OpenSea marekt and they originally sold for 0.04 ETH which was about $112 at the time of writing. This is the first known case of the DOJ charging NFT charging the creators with the alleged conspiracy to defraud the buyers and could be a landmark case in the rising FNT industry that generated $25 billion in total trading volume in 2021 alone, with attorney Damian Williams saying:
“NFT’s have been around for several years, but recently mainstream interest has skyrocketed. Where there is money to be made, fraudsters will look for ways to steal it. As we allege, Mr. Nguyen and Mr. Llacuna promised investors the benefits of the Frosties NFT’s, 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.”
Llacuna and Nguyen were arrested in Los Angeles and the alleged scammers were about to launch another project dubbed Embers. The ETH-based proejct of $5,555 profile pictures was supposed to launch on March 26 with a payday of $1.5 million worth of ETH if the mint was not sold out. Each individual was charged with a count of conspiracy to commit wire fraud and money laundering with a sentence of 20 years in prison for each offense.