The United States’ prosecution has charged two California-based creators with money laundering and fraud charges relating to the Frosties rug pull earlier this year.
A rug pull is where fraudsters hype up an NFT project using social media, only to make away with the money once users put their money into the project.
Ethan Nguyen and Andre Llacuna have been accused of stealing $1.1 million from the Frosties scam. The Frosties scam was the first NFT rug pull in 2022, totalling over $1 million. This scam has helped increase the number of NFT scams that have plagued the crypto market over the past year.
The scammers sold 8888 NFTs to users at an average floor price of 0.04 Ether, making up a total of $1.3 million at the time. The scammers were arrested in Los Angeles in California and were charged with the count of committing wire fraud which could lead to a jail sentence of 20 years if found guilty.
According to blockchain analysis from Chainalysis, rug pulls account for 37% of all crypto scam revenue in 2021, rising from a mere 1% in 2020. The company said that scammers made away with $2.8 billion worth of cryptocurrencies in 2021 because of these rug pulls.