The FBI will notify victims of a million-dollar fraud via NFT.

The American institution is preparing to use non-fungible tokens to return the full amount to victims involved in a cryptographic fraud scheme. The latter began with the launch of a fictitious project called CluCoin in 2021.

According to an August 21 statement from the Florida District Attorney’s Office, Austin Michael Taylor, 40, pleaded guilty to wire fraud on August 15.

Taylor is accused of regularly using investor funds earmarked for his project to finance his online gambling habits.

The FBI will inform the identified victims of the planned restitution via their NFTs. This is one of the first times that law enforcement authorities have publicly stated that they will use NFTs to contact victims.

The US Attorney’s office has also asked anyone suspected of being a victim of the fraud scheme to provide relevant information to the FBI.

The CluCoin System under the Microscope

Taylor, better known by his online pseudonym DNPThree, founded CluCoin in 2021. The latter promised investors that the cryptocurrencies paid out would have a charitable purpose.

After raising funds, Taylor launched CLU via an initial coin offering (ICO). Following the launch, Taylor focused on minting NFTs as well as developing new computer games. He even proposed launching a metaverse platform.

Taylor also organized a conference entitled “NFTCon: Into the metaverse” at a Miami hotel on April 4, 2022. The aim was to generate further interest in CluCoin and its spin-off projects.

After the event, Taylor began making withdrawals from a crypto wallet, which controlled some of CLU’s investor funds. Between May and December 2022, he had transferred a total of $1.14 million in investor funds to his own accounts on various cryptocurrency exchanges.

Furthermore, these sums had then been transferred to online casinos.

A Scam Unmasked

Taylor publicly apologized for his actions in January 2023. He said at the time that he had become totally addicted to gambling. He also added that he was deeply sorry for misappropriating investor funds.

Taylor has agreed to pay $1.14 million in restitution to the victims. He will be sentenced on October 31 and faces a maximum sentence of 20 years in prison for wire fraud.

On August 2, the FBI issued a warning asking Internet users to be vigilant against scammers claiming to be affiliated with cryptocurrency exchanges to steal users’ funds.

On June 4, the FBI sounded the alarm about the proliferation of scams linked to work-at-home job offers, where cryptocurrencies are used as currency. Fraudsters, masters of manipulation, weave enticing scenarios to lure their victims into their nets.

What’s more, these glittering job offers are scams aimed at dispossessing individuals of their digital assets!

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