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HomeTop NFT Collection2 Men Arrested, Charged With Rug Pull: What The Court Case Means...

2 Men Arrested, Charged With Rug Pull: What The Court Case Means For NFTs – Converted Organics (COIN)

The U.S. Department of Justice has formally charged the two with money laundering and fraud related to “rag pull” that accompanies the launch of the non-fungible token collection.

What happened: The Ministry of Justice charging Ether Nguyen (Also known as Frosty) Andre Lacuna (Also known as heyandre) A conspiracy to commit a transfer fraud and a conspiracy to perform money laundering.

Prices come from the launch of the duo FrostyThe NFT collection, which raised millions of dollars.

Frosty cast at a price of 0.04 Ethereum (Cryptography: ETH). After the collection of 8,888 NFTs was created, the duo transferred cryptocurrencies to various wallets they manage.

This happened after a promising member of the Frosties community promised to complete some items with the money they raised. Items mentioned included giveaways, early access to the game, and a pass to the next Frosty season.

“Where you have money to make money, scammers will look for ways to steal it,” a US lawyer said. Damian Williams Said. “As we claim, Nguyen and Lacuna promised investors the benefits of Frosty NFTS, but when sold out, they pulled the rug from underneath the victims and shut down the website almost immediately. And sent the money. “

The Justice Department also said the duo is working on launching a second NFT collection called Embers that has the potential to generate $ 1.5 million in revenue. Embers is due to be launched on March 26, 2022, and the Justice Department said it saw similarities with Frosty and believed it would trigger another rug.

The two accusations against Nguyen and Lacuna will each be sentenced to up to 20 years in prison if convicted.

Related Links: What is an NFT?

Important reason: NFTs surged in popularity last year.

“NFTs represent a new era of financial investment, but the same rules apply to investments in NFTs or real estate development,” said IRS-CI Special Agent. Thomas Fatrusso Said. “You cannot raise money for a business opportunity, abandon that business, or abandon the money provided by an investor.”

Many of the investigators involved point to the NFT market, which is of interest to scammers. The growing number of anonymous artists and project founders is said to be hidden “behind the online identity.”

This is the first major arrest in the NFT market and additional projects may be placed under the microscope.

Some projects were created in 2021, but I only saw the founders abandon the projects and make money.

Accusations and warnings from the Justice Department can help remind us that some projects have anonymous founders who have nothing to lose.

This example of rug pull and the increase in fraud in the market Coinbase Global Inc (NASDAQ:coin) Partner with the public identity to launch a new NFT, or an existing project proven at launch NFT Marketplace.

High seas Had a hard time catching up with all the existing NFT projects and took a long time to validate the collection. This led to another scam of creating a fake collection and duplicating the NFT collector.

The first case from the Department of Justice is one of many cases and can serve as a warning to remove potential rug pulls.

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