The Department of Justice announced Thursday that law enforcement rounded up two men accused of running not one, but two fraudulent non-fungible token projects. The men, both 20 years old, allegedly sold NFTs with a promised raft of benefits to unsuspecting investors before disappearing with the funds and leaving holders out to dry.

At issue were “Frosties” NFTs, still listed on OpenSea, which the DOJ said Ethan Nguyen and Andre Llacuna pitched as guaranteeing exclusive giveaways and “early access to a metaverse game.” Of course, the two men allegedly “abandoned the Frosties NFT project within hours after selling out of Frosties NFTs, deactivated the Frosties website, and transferred approximately $1.1 million in cryptocurrency proceeds from the scheme[.]”

In late 2021, the blockchain analytics firm Chainalysis reported that rug pulls “have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021” for a total of at least $2.8 billion worth of crypto that year alone.

Nguyen and Llacuna are charged with wire fraud, which has a maximum potential sentence of 20 years in prison.

Notably, the two men supposedly operated under a ream of aliases, including such gems as “Frostie,” “Jakefiftyeight,” “Jobo,” “Joboethan,” “Meltfrost,” and “heyandre.”

And, at least according to law enforcement, Nguyen and Llacuna were queued up to run another rug pull expected to garner around $1.5 million in sales. That project, Embers, was scheduled to mint on March 26.

“Each individual Ember is carefully curated from over 150 traits, along with some incredibly rare 1/1s that have traits that can’t be found from any other Ember,” reads the project’s webpage. “Our vision is to create an amazing project that will shed light, joy, love, and creativity! Burn on, Embers!”

Burning your bags.
Credit: Screenshot: Embers

Thursday’s arrests make it all the more clear that cryptocurrency history is repeating itself. In 2017, the initial coin offering (ICO) boom drew scores of scammers and celebrity shills who profited off retail investors FOMOing into cryptocurrency. It took some time, but law enforcement and the Securities and Exchange Commission eventually cracked down on those scammers, too.

What we’re seeing now is likely the tip of the Department of Justice’s investigatory iceberg when it comes to NFT scams. Don’t be surprised if Nguyen and Llacuna’s arrests only represent the first of many to come.