Frosties NFT: The $1.1M Ice Cream Rug That Changed the Rules

On 9 January 2022 buyers snapped up 8,888 cartoon ice cream cones at 0.04 ether each, roughly $112 apiece. The collection was called Frosties, and it sold out in under an hour. Buyers had been promised far more than a picture: giveaways, early access to an online game, rewards for holding on, and first rights to future Frosties collections. Within hours the website was gone, the social media accounts had been switched off, and about $1.1 million had moved to wallets controlled by the two men behind it.

They were Ethan Nguyen, who went by "Frostie" online, and Andre Llacuna, known as "heyandre". Both were 20 and lived in the Los Angeles area. Ten weeks later they were in handcuffs, and the case became the first known time the US Department of Justice had charged the creators of an NFT project with defrauding the people who bought it.

The ending was quieter than the arrest. Nguyen pleaded guilty in March 2025, gave up $578,899.65 and was sentenced to one year of probation, with no prison time. Llacuna was placed in a court programme for young offenders. Neither outcome was announced by prosecutors.

What the buyers thought they were getting

An NFT, or non-fungible token, is a unique entry on a blockchain (a public digital ledger that records who owns what) that says a particular wallet owns a particular item, usually a picture. Think of it as a numbered certificate for a limited-edition print, except the certificate is the thing being traded. In late 2021 and early 2022 people were paying thousands, and sometimes millions, of dollars for them.

Frosties was sold as a "utility" NFT, meaning the picture came with promised extras, the way a membership card comes with perks. Holders were told they would get giveaways, early access to a game set in the "metaverse" (a shared online world), and staking rewards: in plain terms, a payout of new tokens for agreeing not to sell, a little like a loyalty bonus for holding a share. None of it existed. Buyers who "minted", the term for buying straight from the creators at launch, were paying for a roadmap.

The project was run the way most NFT launches were then: anonymous founders, a busy chat server on Discord, a Twitter account building excitement for weeks, and a launch date. When the sale filled, the founders had the money and the buyers had the pictures.

The rug pull

Crypto calls this a rug pull: the people running a project collect investors' money and then disappear with it, pulling the rug out from under everyone standing on it. According to the criminal complaint, Nguyen and Llacuna shut the Frosties website, took down its accounts, and moved the proceeds through a series of transactions between wallets they controlled, designed to hide where the money had come from. Within days the cartoons that had cost $112 were trading for about $3 on OpenSea, the largest NFT marketplace.

They did not stop. By March 2022 the pair were advertising a second collection called Embers, due to go on sale around 26 March. Investigators believed it was built to work the same way and expected it to bring in about $1.5 million.

It never launched. Agents from IRS Criminal Investigation, the tax agency's police arm, Homeland Security Investigations and the US Postal Inspection Service had been following the money. A blockchain is public, so every transfer out of the Frosties wallets could be followed, however many hops it took. On 24 March 2022 both men were arrested in Los Angeles. The office of Damian Williams, the US Attorney in Manhattan, charged each with conspiracy to commit wire fraud and conspiracy to commit money laundering, two crimes carrying up to 20 years apiece. "Where there is money to be made, fraudsters will look for ways to steal it," Williams said.

Why it mattered

There was no new crypto law involved. Prosecutors used wire fraud, an offence that covers lying to people to take their money using phones, email or the internet, and money laundering. The message to every anonymous NFT team was that promising perks, taking the money and vanishing is fraud under laws that have existed for decades.

The case also showed how thin crypto anonymity is. The founders used online nicknames and never showed their faces, yet within ten weeks investigators had their real names, their home city and their next project.

How it ended

The two cases moved slowly and then split. On 28 October 2022 Llacuna was accepted into the Young Adult Opportunity Program, a scheme in the federal court in Manhattan that offers some young adult defendants intensive supervision instead of the usual prosecution, and which can end with lighter treatment or dropped charges. What happened to his case afterwards has not been made public.

Nguyen waived indictment and pleaded guilty to one count before Judge Ronnie Abrams on 11 March 2025. He agreed to forfeit a money judgment of $578,899.65, the share of the proceeds the court found he had personally obtained. On 30 June 2025 Judge Abrams sentenced him to one year of probation and a $100 assessment. A final forfeiture order followed in December 2025 and was amended in January 2026.

For the buyers, nothing in the court record shows any repayment. The forfeited money went to the US government, not automatically to the people who paid $112 for a cartoon. Charges that once carried 20-year maximums ended, for Nguyen, in no prison time at all.