Authorities Charge 20-Year-Olds With Million Dollar NFT Scam

Authorities Charge 20-Year-Olds With Million Dollar NFT Scam

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US authorities have charged two twenty-year-olds, Ethan Vinh Nguyen and Andre Marcus Quiddaoen Llacuna, with conspiracy to commit wire fraud and conspiracy to commit money laundering. The two crypto enthusiasts allegedly used an upstart NFT business to siphon funds to their personal accounts. Authorities arrested the duo on Thursday, only days before they launched their next NFT project.

What Are NFTs?

Non-fungible tokens, or NFTs, are digital tokens that exist on the blockchain like cryptocurrency. Some enthusiasts have created a robust trading economy around NFTs, with users spending thousands of dollars to “own” pieces of digital artwork. Many critics argue that NFT investors don’t “own” anything, as the creator of the original piece of art owns the right to replicate and sell the work’s likeness. 

Some NFT enthusiasts argue that the new technology will open up the possibility of digital ownership in spaces like the Metaverse and other virtual reality standards. This has created a surge in demand for these highly-specialized images. 

Nguyen and Llacuna Face Serious Charges

Nguyen and Llacuna could face up to 20 years in jail if they’re found guilty of wire fraud and conspiracy. The pair allegedly “pulled the rug” on investors after drumming up over $1 million for their NFT project, Frosties. The Frosties project centered around works of digital art depicting ice-cream-like characters with various toppings and clothing.

The creators abandoned the project, sucking up the funds from investors without releasing the promised number of NFTs. This left early adopters without the digital art they’d commissioned, so they turned to the authorities to make things right.

Investors Celebrate Arrests

Several Frosties investors were delighted to hear the two alleged scammers were facing justice for their “rugging” attempt. “I’m also glad that others have been put on notice in this Wild West space that the authorities are watching,” said Marcellus King, an NFT investor who lost $3,000 in the Frosties scam

According to a criminal complaint, Nguyen admitted to the scam on Discord, an instant messaging app, while talking to an NFT enthusiast defrauded in the Frosties scam. “I know this is shocking, but this project is coming to an end. I never intended to keep the project going, and I don’t have a plan for anything in the future,” Nguyen explained. “I want you to know that I do care. I appreciate you, even if you don’t appreciate me,” he added, including some Ether cryptocurrency as an apology.

“Rug pulls” are surprisingly common in the NFT space. Digital currency enthusiasts should use caution when investing in any NFT initiatives.