Frostie the Rug Pull

It’s hard to tell what’s real in the crypto space, especially when it comes to NFT projects. There are a lot of promises, a lot of cartoon characters, and A LOT of money changing hands. The only question is, which side of the money are you going to land on?

With projects popping up left and right and frenzied purchases fueled FOMO, it’s easy to not know whom to trust.  Case and point, FROSTIES.  Here is a great example of a project that looked promising. They had a roadmap with promised rewards and promoted plans for another NFT series release called “Embers”.  Then, mere hours after selling out their initial release and banking a ton of money, the creators closed shop, shut down the website, and walked away from the project, leaving a community of supporters and holders with their Frosties and wondering what the hell happened. 

Ethan Nguyen and Andre Llacuna are the creators of Frosties who allegedly earned around $1.1 Million selling their “Frosties” NFTs before abruptly terminating the project and making away with BIG money.  Directly after closing the project, they transferred approximately $1.1 million in cryptocurrency funds to various wallets to try to wash their money and hide the source. The project reportedly released 8,888 NFTs selling for ETH equivalent to around $130 each. 

Their new “Embers” roadmap for their new series promised a robust future for the project. There was a Community Wallet with 25% of funds “to help with the longevity of the project”, a plan for 10 NFTs to be given away when the new Discord reached 10,000 members, staking, and a $50,000 donation to the Red Cross. According to The Verge. The Red Cross has acknowledged receipt of the donation, so at least that happened. With this detailed roadmap, it’s easy to see how community members felt like this project and the team behind it was going places. 

The criminal complaint includes a message on Discord from Ethan Nguyen to one of the community moderators in which he says, “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.”  This is clear evidence presented in the complaint. The US Department of Justice has issued a statement on the scandal which includes a quote from IRS-CI Special Agent-in-Charge Thomas Fattorusso explaining the case against the two accused men. “You can’t solicit funds for a business opportunity, abandon that business and abscond with money investors provided you.” 

The two were identified initially via links from their Coinbase accounts to Citi Bank cards and Government ID cards associated with the accounts that they used for payouts. Nguyen and Llacuna have been charged with “conspiracy to commit wire fraud and conspiracy to commit money laundering”. Both Nguyen and Llacuna have been arrested in Los Angeles.

If you believe that you have been a victim of this crime, please contact HSI Special Agent Paul Nugent at [email protected]

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