The DOJ (Department of Justice) has taken measures against an accused rug pull of NFTs (non-fungible tokens) following it whacked the founders of an NFT project called Frosties with allegations taking account of money laundering as well scam.
The duo founders have been charged with purposefully hiding the identities to execute the rug pull on the community of Frosties by not delivering on the roadmap as well as the utility of the project, which flaunted the rewards as well as giveaways for the consumers holding NFTs, access to a game based on the metaverse, unique access to the project’s future mints.
As per a release of Thursday, which was made on the behalf of the Office of Attorney under New York’s Southern District, Andre Llacuna and Ethan Nguyen were caught in Los Angeles with having charges of doing wire scam as well as conspiring to launder money in connection with a million-dollar project to swindle the buyers of the Frosties’ NFTs. The complaint of DOJ asserts that they suddenly quit and closed the project just in a matter of hours of trading NFTs of $1.1M, and transacted the proceeds to different crypto wallets that were in their control.
They carried out many transactions to make the funds’ source ambiguous. As suggested by the term, a rug pull counts to be a situation where a gaming project and/or NFT’s creator calls for investments and then suddenly leaves the respective project by taking the funds of the investors fraudulently, as mentioned by the release. As included in the release, Thomas Fattorusso – the special agent-in-charge of IRS-CI – cautioned that his group is keenly observing crypto.
Even though NFTs are a comparatively unique option for financial investments, the principles implemented over an investment related to NFTs or the development of real estate. The DOJ additionally pointed out that before their Los Angeles-based arrests, the alleged couple was getting ready to make almost $1.5M in crypto proceeds. On being found guilty, a lengthy imprisonment sentence might be experienced as 20 years is a maximum sentence for each of the accusations.
Although it seems that a number of the dodgy NFT programs have been flowing under DOJ’s radar during 2021, the speculation indicates that the agency is elevating its attention toward non-fungible tokens this year through the NCET (National Cryptocurrency Enforcement Team) thereof which got established in October.