The masterminds behind the Frosties non-fungible token (NFT) scam have been apprehended by the US Department of Justice (DOJ). Ethan Nguyen and Andre Llacuna are charged with conspiracy to commit wire fraud and conspiracy to commit money laundering.
The DOJ said the founders raised over $1 million for Frosties and then transferred the money to wallets under their control, rather than develop the project as promised.
Working on behalf of the DOJ, US Attorney Damian Williams said: “NFTs have been around for several years, but recently mainstream interest has skyrocketed. Where there is money to be made, fraudsters will look for ways to steal it. As we allege, 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. Our job as prosecutors and law enforcement is to protect investors from swindlers looking for a payday.”
Ngyuen and Llacuna were caught attempting to repeat their crime in the form of a new NFT project called Embers, presumably because anyone investing money in the project would have been burned.
New task force investigates NFT fraud
An additional point of interest from the DOJ press release is the blink-and-you-miss-it mention of the “Dark Web and Cryptocurrency Task Force,” a previously unheard of body operating within Homeland Security Investigations (HSI).
That revelation came directly from HSI’s chief investigator, HSI Acting Special Agent-in-Charge Ricky J. Patel. Patel operated in the multi-agency investigation including Homeland Security (HSI), the United States Postal Inspection Service (USPIS), and the Inland Revenue Service’s Criminal Investigation (IRS-CI).
“HSI New York’s Dark Web and 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,” said Patel, naming the previously unknown task force for the first time.
Last October, Deputy Attorney General Lisa Monaco announced that the Department of Justice would create two new bodies to tackle cryptocurrency cybercrime. At the time, neither of these two teams were given names or titles.
Whether the Dark Web and Cryptocurrency Task Force is one of the bodies previously mentioned by Monaco is a point for speculation, but it further demonstrates that crypto criminals are actively being watched and investigated by opaque bodies and task forces within the most powerful U.S. government agencies.
That fact may give crypto criminals, and non-criminals too, the chills – and pause for serious thought.
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