Over a “rug pull” scheme, the US Department of Justice detained two 20-year-old males and charged them with fraud and money laundering. The accused are Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacua, the creators of the “Frosties” NFTs. Both men could face a maximum sentence of 40 years in prison. A rug pull is when fraudsters utilize social media to build up a non-fungible token (NFT) project, only to take the money once consumers invest their money into the project.
The NFTs raised $1.1 million for Nguyen and Llacua. Frosties, an ice cream-themed project with 8,888 NFTs, was a popular collection. The project was sold out within an hour after the public launch, with each NFT priced at the Ethereum equivalent of around $130. It was quickly abandoned by the creators. They then shut the Frosties website, failing to deliver on their commitment to Frosties holders. When buyers tried to resell their NFTs, they only received a few dollars, and they gave up all prospect of seeing future promised benefits, such as 3D copies of their avatars and a Frosties video game.
Nguyen appears to have apologized and confessed to the administrator of the Frosties community Discord server in the complaint. “I know it’s hard to believe, but this project is coming to and end. It reads, “I never planned to keep the project running, and I have no plans for the future.” Nguyen also handed the moderator some Ethereum “for your difficulties” and advises them to delete their Discord account, according to the message. “I want you to know that I am concerned about you. It concludes, “I appreciate you, even if you don’t appreciate me.”
Investigators matched Nguyen and Llacuna’s Discord account information, which included their IP address, email address, and phone number, to their Coinbase cryptocurrency exchange accounts. The accounts were linked to a government ID and a Citibank credit card, which helped law police find them. Investigators also tracked a series of transfers that the couple allegedly exploited to hide where the Frosties funds were being sent.
Both Nguyen and Llacuna were preparing to debut the sale of their second NFT collection, titled ‘Embers,’ before their arrest. The estimated value of the virtual collectibles from this collection was $1.5 million.
