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U.S. Department of Justice Has Charged 2 in NFT ‘Rug Pull’ Scheme

The U.S. Department of Justice has prosecuted 2 individuals that are reportedly behind the Frosties NFT scam.

Department of Justice

U.S. prosecutors in the Southern District of New York have charged 2 men who were allegedly behind the “Frosties” NFT project on Thursday. The “Frosties” NFT project is an infamous scam whose Discord server just up and vanishes reportedly just hours after mint.

This is an early example of the U.S. law enforcement at work in prosecuting an alleged NFT “rug pull.”

Prosecutors say that both Ethan Nguyen and Andrew Llacuna are the pseudonymous backers of the scam, have defrauded their NFT investors of well over $1 million. Both of them are among the very 1st criminal NFT defendants in the rug-pull era, with them facing criminal conspiracy and financial crime charges.

Damian Williams, a U.S. Attorney 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,” in a press conference.

Adding to that was Homeland Security Investigations (HSI) special agent Ricky J. Patel, who said, “The arrested thieves allegedly hid behind online identities where they promised investors rewards, giveaways, and exclusive opportunities before implementing their ‘rug pull’ scheme – leaving investors with empty pockets and no legitimate investment. HSI New York’s Dark Web & Cryptocurrency Task Force worked closely with our IRS-CI partners to identify and shut down these fraudsters as they prepared to launch the sale of yet another NFT project that would have likely scammed countless others.”

Protocol was the one to make a report regarding the Frosties situation back in February with an article.

This is far from the first ‘rug pull’ situation that’s been reported. Not too long ago, former adult film star Lana Rhoades has seemingly involved in a ‘rug-pull’ incident herself, pertaining to her NFT project titled “CryptoSis.” The project did not go well, and the ordeal resulted in Rhoads deleting her Twitter account, with her mentioning she was strictly “done” with NFTs just before she deleted her account.

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