U.S. government prosecutors have charged two men with fraud and money laundering over a cryptocurrency “rug pull” scheme. Ethan Nguyen and Andre Llacuna allegedly earned around $1.1 million by selling non-fungible tokens (NFTs) based on cartoon-like characters called “Frosties.” After selling the NFTs, they shut down the project and transferred its funds to a series of separate crypto wallets, leaving Frosties owners bereft of promised rewards.
Wait. Crypto wallets are anonymous. How were they found?
Investigators matched Nguyen and Llacuna’s Discord account data (including Nguyen’s IP address and Llacuna’s email address and phone number) with corresponding accounts on the Coinbase cryptocurrency exchange. The Coinbase accounts were linked with a Citibank credit card and government ID. Crypto wallets may be anonymous, but accounts on centralized crypto exchanges with KYC (know your customer) regulations are not. Oops.
The moral of this story: Watch out for rug pulls and don’t post news about your fraudulent activity on Discord.
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