The U.S. Department of Justice has arrested two individuals allegedly involved in a multi-million-dollar “rug pull” scheme. The justice department said that they abandoned the NFT project after it was sold out and deactivated the website. They then transferred more than $1 million in crypto into the wallets they controlled.

NFT Buyers Deceived by a Rug Pull Scam

The U.S. Justice Department announced Thursday that two 20-year-olds have been charged in a “non-fungible token (NFT) fraud and money-laundering scheme.” The defendants, Ethan Nguyen and Andre Llacuna, allegedly defrauded purchasers of NFTs advertised as “Frosties.”

According to the DOJ on Jan. 9, defendants “abandoned Frosties NFT Project within hours of selling out Frosties NFTs and deactivating the Frosties website. They also transferred approximately $1.1 Million in cryptocurrency proceeds from this scheme to different cryptocurrency wallets under control in multiple transactions designed obfuscate original source of funds .”

U.S. Attorney Damian Williams stated:

Mr. Nguyen and Mr. Llacuna promised investors the benefits of the Frosties NFTs, but when it sold out, they pulled the rug out from under the victims, almost immediately shutting down the website and transferring the money.

Nguyen, Llacuna were taken into custody in Los Angeles, California as they tried to sell a second set NFTs labelled “Embers”, according to the DOJ.

The Justice Department believes that Embers is “another fraud scheme,” noting that it was expected to launch on or around March 26 and anticipated to generate approximately $1.5 million in cryptocurrency proceeds.

The defendants “are each charged with one count of commit wire fraud … and one count of conspiracy to commit money laundering,” the DOJ said, noting that each count carries a maximum sentence of 20 years in prison.

What do you think about this NFT rug pull case? Please leave your comments below.

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