• Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna had been charged with conspiracy to commit wire fraud and conspiracy to commit cash laundering
  • The duo may resist 20 years in jail, in accordance with prosecutors

The 20-year-old creators behind an alleged $1.1 million NFT rip-off had been arrested on Thursday — simply days earlier than launching an extra potential fraud scheme. 

Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna had been charged with conspiracy to commit wire fraud and conspiracy to commit cash laundering. The duo may resist 20 years in jail, prosecutors mentioned.

In January, Blockworks first reported operators of the non-fungible token (NFT) assortment referred to as Frosties funneled funds from the venture after buyers poured over $1 million into the cartoon ice cream digital collectibles. The gathering was rugged, a crypto-native time period for when a venture’s builders soar ship after siphoning investor funds.  

Marcellus King, a first-time collector who misplaced about $3,000 in ether from the rug pull, instructed Blockworks that he’s “glad that justice was served to those scammers.”

“I’m additionally glad that others have been placed on discover on this Wild West area that the authorities are watching,” King mentioned.

“This may assist deliver extra honesty and accountability to the NFT market.”

On Jan. 9, 8,888 Frostie NFTs had been snatched up on market OpenSea creators quickly after shutting down its Discord and Twitter. Venture founders collected stolen funds and left after making guarantees of premiums corresponding to “staking metaverse [and] breeding features,” in addition to “[becoming] eligible for holder rewards,” in accordance with the unique web site, which has since been taken down.

Controllers of the developer’s pockets deal with have transferred out a lot of the preliminary stolen funds, in accordance with Etherscan knowledge

Per a legal criticism, Nguyen confessed and apologized to a moderator of Frostie’s neighborhood Discord server — sending the mod some ether “for [their] troubles.”

“I do know that is surprising, however this venture is coming to an finish. I by no means supposed to maintain the venture going, and I don’t have a plan for something sooner or later,” the message reads. “I would like you to know that I do care. I recognize you, even in the event you don’t recognize me.”

A screenshot of a Discord dialog launched as a part of the legal criticism

Defendants additionally had plans for a follow-up NFT assortment, in accordance with the criticism, after siphoning funds from their first venture. 

The venture, dubbed “Embers,” was set to launch March 26 — two days after the duo’s arrest. The venture was estimated to garner round $1.5 million in gross sales. 

Ashley, a Frosties NFT holder, instructed Blockworks the arrest “was a shock,” however that she “had at all times heard rumblings of [the project] getting investigated.” 

“We hope this legal case units a precedent for anybody else who comes into the NFT area seeking to rip-off an harmless neighborhood,” Ashley, who didn’t disclose her final title, mentioned.

“It’s the primary huge crackdown within the NFT world, so scammers ought to take observe.”

Rug pulls account for roughly 37% of all cryptocurrency scams — which in complete fetched $2.8 billion final yr, in accordance with blockchain analysis agency Chainalysis.

“The trending market and demand for NFT investments has not solely drawn the eye of actual artists, however rip-off artists as nicely,” Ricky Patel, a particular agent for Homeland Safety Investigations, mentioned in a assertion. “[The two left] buyers with empty pockets and no professional funding.”

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  • Morgan Chittum is a New York-based reporter masking NFTs, the metaverse, play-to-earn gaming and different rising Web3 tech for Blockworks. Beforehand she was a road reporter, masking crime at New York Each day Information, and a media and journalism fellow on the Poynter Institute.

    Contact Morgan by way of e-mail at [email protected]

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