Frosties NFT Rug Pull Scandal — Two Scammers Have Been Arrested

One NFT collection, Frosties, started 2022 out with a bang when the creators pulled the rug out from under investors and took about $1.1 million worth of cryptocurrency with them. On March 24, the U.S. Department of Justice (DOJ) announced the arrests of two reported scammers at the helm of the Frosties NFT rug pull.

While justice is being served to alleged scammers Ethan Nguyen and Andre Llacuna, investors are still out big time. Here’s what happened and what to expect from the defendants' trials.

The DOJ wrote in a press release that Nguyen (also known as Frostie, Jakefiftyeight, Jobo, Joboethan, and Meltfrost) and Llacuna (also known as heyandre) are being charged with two criminal complaints. The complaints are conspiracy to commit wire fraud and conspiracy to commit money laundering.

According to the DOJ, “Rather than providing the benefits advertised to Frosties NFT purchasers, Nguyen and Llacuna transferred the cryptocurrency proceeds of the scheme to various cryptocurrency wallets under their control.”

The DOJ said at the time of the Los Angeles arrest that the defendants were in the process of a second NFT rug pull through a project called Embers, which was poised to rake in upwards of $1.5 million.

“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,” says U.S. attorney Damian Williams.

Frosties creators Nguyen and Llacuna minted the NFT collection Frosties, but abandoned investors right away. The pair took the proceeds and transferred them to their own cryptocurrency wallets, ultimately draining the purchasers from any value left in their NFTs. While Frosties promised 3D avatars and a Frosties video game suited for the metaverse, it was all a guise for an elaborate scheme to defraud buyers.

After the rug pull, Nguyen wrote to the Discord community, “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.” The creators went dark by shutting down the Frosties website and social channels.

When Nguyen and Llacuna got arrested, they were in the process of pulling off another NFT rug pull, this time with a project called Embers. The collection was expected to launch this month, and initial investments actually went to the Red Cross as a donation. However, the promised community-controlled wallet was all a ruse.

The DOJ reports using information like Nguyen’s IP address, Llacuna’s email address and phone number, Coinbase account information, and Discord data to catch the pair. Ultimately, a Citibank credit card, federal ID, and numerous money laundering transfers helped the department catch the pair before another scheme went down.