In relation to a bitcoin rug pull conspiracy, the US Department of Justice arrest two men in a fraud and money laundering case on Friday.
Andre Llacuna and Ethan Nguyen reportedly made $1.1 million by selling non-fungible tokens based on “Frosties,” snowman-like figures.
NFT of Frosties Sell out fast
Frosties go for as less as 0.001 ETH (about $3) on the OpenSea private market. They were sold for 0.04 ETH at the time of minting, which was around $112. Frosties was a much-anticipated project that sold out of 8,888 NFTs within an hour of becoming live.
However, officials say that on or around Jan. 9, Nguyen and Llacuna quit the project and moved $1.1 million in bitcoin to other crypto wallets they owned. According to officials, when the two were detained in Los Angeles they were promoting a second, an identical project dubbed “Embers”.
Defendants in first NFT Rug Pull
Nguyen (“Frostie”) and Llacuna (“heyandre”) are one of the first criminal NFT defendants in the rug pull era, which might be a landmark case for the booming NFT industry, which is estimated to produce $25 billion in total trading volume in 2021 alone.
A “rug pull” is a phrase used to describe situations in which project creators sell NFTs based on false assertions of future advantages and utility, then flee with the money.
US Attorney Damian Williams in a news statement said:
“Mr. Nguyen and Mr. Llacuna assured investors the perks of the Frosties NFTs, but once they sold out, they swiftly pulled down the website and transferred the money.”