I suppose, for most of us, we need to start with what is an NFT? A.K.A. – Non-Fungible Token?
An NFT is a unique digital media asset that lives on the blockchain. It links to the media it represents to provide an irrefutable certificate of ownership. (i.e., a digital work of art, photograph, cartoon, written work, etc.)
It’s a digital asset that uses blockchain technology to transform it into something “immutable” — cannot be changed or tampered with.
If you want a better understanding of what an NFT is, I suggest you watch the following short video recently produced by The Economist titled: What are NFTs?
That brings us to the question: So, what is an NFT “rug pull?”
A “rug pull” is when a scammer purports to have created a digital asset(s), puts it on the market for sale, sells it, then digitally disappears. “Pulls the rug.”
The scammer does not give the customer what they promised; takes off with their cryptocurrency and hopes to never be located.
Except, the same blockchain technology that makes the transaction impossible to tamper with (because it is decentralized) makes it possible to track scammers despite their best efforts to digitally evade law enforcement.
Did this dissuade two 20-year-old scammers?
These two 20-year-olds allegedly “pulled the rug” on their customers/victims who purchased their NFTs (in the form of various cartoon characters) to the tune of over 1 million dollars.
Did it take long for law enforcement to track the scammers down?
Not at all.
As detailed in the March 24, 2022, U.S. Department of Justice (DOJ), Southern District of New York, announcement, the “NFT Rug Pull” scam started in January of this year, and last month the alleged fraudsters were arrested.
So, how did law enforcement track them down?
The twenty-two-page indictment provides a detailed road map of how the investigators uncovered more and more digital details to identify the criminals and ultimately their physical locations.
The investigators had to navigate social media, and website domains, serve grand jury subpoenas, as well as to conduct physical surveillance of at least one of the targets.
And it all started with the victims notifying law enforcement of one solitary anonymous exchange on a social media site the scammers never imagined could lead back to them.
The investigation is a true insight into the complexity of navigating the digital world in order to track down criminals.
In my next post, I will present the step-by-step process law enforcement employed to find the scammers.
*In the meantime, if you don’t want to wait for the next post, and you’re eager to review the indictment right away, I’ve embedded the complaint link here.
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Thank You Ronald
This Block Chain technology is an important development
in Crypto Security, I hope I can encourage my son to engage
in this important field
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