Police arrest two 20-year-olds for allegedly cheating $ 1 million collectors - using ice-themed NFT artwork

Police arrest two 20-year-olds for allegedly cheating $ 1 million collectors – using ice-themed NFT artwork – Mail Bonus

Scammers are entering the NFT gold rush.

One such plot ended last week when US police arrested two 20-year-old men, Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna, in Los Angeles in connection with an alleged $ 1.1 million NFT fraud.

In January, the two launched an NFT collection called Frosties and released 8,888 ice trays that sold out within an hour on OpenSea. They promised investors in the project early access to related metaverse play and other benefits, including the ability to “cultivate” new Frosties from existing characters.

Instead, less than an hour after the fall on January 9, Nguyen and Llacuna immediately left Frosties, shut down their website and 25,000 Discord channel members, and put all their money in their own cryptocurrency wallets. Such a scam is known as a “rug” where the creators of an advertised NFT or game project stop working on the issue but keep investors’ money.

Frosties NFTs by Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna as seen on OpenSea.

The duo was arrested on charges of conspiracy to commit wire fraud and conspiracy to launder money. They face up to 20 years in prison.

“Mr. Nguyen and Mr. Llacuna promised investors the benefits of the Frosties NFTs, but when it sold out, they pulled the rug away from the victims, almost immediately shut down the website and transferred the money,” New York Attorney General of the Southern District of New York said in a statement. “Our role as prosecutors and law enforcement is to protect investors from scammers looking for a payday.

The lawsuit against Nguyen and Llacuna contains a screenshot of an apology message that Nguyen sent to the manager of the Frostie community’s Discord server.

Ethan Vinh Nguyen said he had sent the message to Frosties Discord's inspector and admitted that he would never follow the project's advertised roadmap.  With the permission of the US Department of Justice.

Ethan Vinh Nguyen said he had sent the message to Frosties Discord’s inspector and admitted that he would never follow the project’s advertised roadmap. With the permission of the US Department of Justice.

“I know this is shocking, but this project is coming to an end. “I never intended to keep the project going and I have no plans for anything in the future,” he wrote.

Upon launch, Frosties boasted all of the ingredients for a popular NFT project. It had “a thriving community with high activity, roadmaps, legitimate site looks, OpenSea accounts and artwork,” Marcellus King, an investor who lost about $ 3,000 because of the scam, told Cryptoslate.

The arrests took place before another NFT fall from the same duet scheduled for this month. A 5,555-piece collection, advertised as Embers, was expected to yield an additional $ 1.5 million, according to Reuters. Authorities believe the two planned to repeat the Frosties gathering and promise Embers buyers benefits such as giveaways, DAO, airdrops, a partnership and a 50,000-person Discord channel.

“Each individual embers is carefully made from over 150 properties, along with some incredibly rare 1/1 items that have properties that cannot be found from other embers,” says the project’s website. “Our vision is to create an amazing project that will shed light, joy, love and creativity! Burn on, embers! “

Both projects seemed to take advantage of the popularity of major NFT collections such as CryptoPunks and Bored Ape Yacht Club, each of which has thousands of computer-generated characters based on the same basic art template, some with rare, consequently valuable features.

“I really like the art style. They were very cute on the website. Frosties had the feeling that people would buy it, you know, “one deceived investor, who spent about $ 1,000 on the project, told Protocol.

Nguyen and Llacuna both organized the NFT projects under pseudonyms – Llacuna goes by the handle “heyandre”, but Nguyen is alternately known as “Frostie,” “Jakefiftyeight,” “Jobo,” “Joboethan,” and “Meltfrost. No one could be reached directly for comments and messages sent to Embers’ Twitter account were not immediately returned.

Their arrest was a joint effort by the Southern District, the New York Field Office of the Attorney General, the New York Field Office of the Department of Homeland Security, and the New York Office of the U.S. Postal Inspection Service.

Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna planned to launch an investment round for a new NFT project

Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna planned to launch an investment round for a new NFT project “Embers” before they were arrested. With the permission of the US Department of Justice.

Frostie NFTs initially sold at 0.04 ETH (approximately $ 123 to $ 136) each. After the quilt, the price fell. Some investors have since tried to recover the Frosties tokens, which survive on the blockchain even after the project ends. In a process called “packaging,” collectors have been renewing them with a new smart deal that is outside the control of the original developer, says Markets Insider.

There are now almost 2,000 “Wrapped Frosties” on OpenSea, but the floor price is only 0.01 ETH (about $ 34), which means that it is still unlikely that investors will ever get their money back.

“NFTs represent a new era for financial investment, but the same rules apply to investing in NFT or real estate development,” said Thomas Fattorusso, IRS-CI Special Agent. “You can not look for funds for business opportunities, leave those trades and avoid the money that investors provided you.

The arrests serve as a warning that while the meta tag represents countless new business opportunities, it also opens the door to new types of fraud. Cryptocurrency fraud totaled $ 2.8 billion last year, 37 percent due to a “rug” bug, according to blockchain research firm Chainalysis.

“Where money can be made,” Williams said, “fraudsters will look for ways to steal it.

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