The DOJ Pulls the Rug on the Frosties NFT Founders | Nelson Mullins Riley and Scarborough LLP

The DOJ Pulls the Rug on the Frosties NFT Founders | Nelson Mullins Riley & Scarborough LLP

On March 24, 2022, the U.S Attorney’s Office for the Southern District of New York charged two people for their supposed support in a plan to dupe buyers of non-fungible tokens (or “NFTs”) known as “Frosties” out of more than $1 million. The two-count grievance charges Ethan Nguyen (otherwise known as “Frostie”) and Andre Llacuna (otherwise known as “heyandre”) with connivance to submit wire misrepresentation infringing upon 18 U.S.C. § 1349 and connivance to submit tax evasion disregarding 18 U.S.C. § 1956.  Each charge conveys a greatest sentence of 20 years in prison.

The Defendants showcased “Frosties” as the section highlight a more extensive internet based local area comprising of games, reward programs, and other benefits.  In January 2022, their “Frosties” pre-deal raised roughly $1.1 million.

In a purported “rug pull,” Frostie and heyandre moved the assets raised through the pre-deal to a progression of independent digital money wallets, disposed of Frosties’ web-based presence, and brought down its website.  The exchange, which was freely recorded and distinguishable on the blockchain, set off financial backers to sell Frosties at a significant discount.  Frostie and heyandre then supposedly continued to move the assets through a progression of exchanges expected to jumble the source and increment anonymity.  The charges came as the Defendants were getting ready for the March 26 pre-offer of their next NFT project, “Embers,” which regulation authorization claims would almost certainly have followed a similar course as “Frosties.”

In a public assertion reporting the captures, the DOJ made sense of how the arising NFT market is a gamble loaded climate that has drawn in the consideration of trick artists.  Representatives from every one of the administrative offices that took part in the examination forewarned the general population and set other potential fraudsters straight of the public authority’s careful attention towards digital currency impropriety.

This examination comes closely following the FBI’s announcement last month of the Virtual Asset Exploitation Unit, a unique team committed to blockchain investigation and virtual resource seizure.  The arraignment of the Defendants in this matter proceeds with forceful endeavors by government offices to reign in agitators partaking in the cryptographic money/computerized resources/blockchain space. 

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