The Department of Justice has hit a pair of 20-year-olds with fraud and money laundering charges. These charges relate to their role in a $1.3 million scheme involving NFTs.
The Department of Justice has hit a pair of 20-year-olds with fraud and money laundering charges. These charges relate to their role in a $1.3 million scheme involving NFTs.
The ice-cream-themed NFTs involved in the scheme were known as ‘Frosties’. Early investors were promised future giveaways, access to future releases, and a metaverse game built around the brand. However, prosecutors allege that Ethan Nguyen and Andre Llacuna executed a ‘rug pull’ in January.
In total, around 9,000 Frosties NFTs were sold. However, the masterminds behind the scheme vanished suddenly, taking the Ethereum of investors with them. The suspects then sent the stolen funds to several wallets under their control.
When the two suspects were arrested, the authorities found that they were already creating a second NFT project, this time named Embers. This was due to launch in March 2022.
USPIS Inspector-in-Charge Daniel B. Brubaker called on investors to be cautious when investing in NFTs, stating, “These assets may seem like a good deal or a way to become wealthy, but in many cases, as in this situation, only lead to the loss of your money.”
Over the past year, NFTs have soared in popularity. In fact, the tokens accounted for nearly $18 billion in total transactions last year, according to a report from two firms tracking the NFT market, NonFungible.com and L’Atelier, a part of BNP Paribas.
Although they’re a new and exciting concept that melds together social media and cryptocurrency, NFTs are not without their downsides. In fact, the above example is just one instance where fraudsters have looked to exploit the space in order to steal money.
As with all cryptocurrency, NFTs are unregulated. However, recently, there have been rumors that the US government is looking to bring in regulations that would help crack down on the fledgling industry and protect investors.
A recent report into crypto crime by Chainalysis shows exactly why the government is thinking in this way. After all, according to the report, ‘rug pull scams’ like the one executed by Nguyen and Llacuna brought in $2.8 billion across crypto last year.
The regulations around NFTs, cryptocurrencies and money laundering are changing constantly in an attempt to protect businesses and dissuade fraudsters.
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