In a groundbreaking move, the Federal Bureau of Investigation (FBI) plans to use non-fungible tokens (NFTs) to notify victims of a $1.14 million crypto fraud linked to the 2021 launch of the sham project CluCoin. This marks one of the first instances where law enforcement has publicly announced the use of NFTs for victim communication.
The scam’s mastermind, 40-year-old Austin Michael Taylor, also known as DNPThree, pled guilty to wire fraud on August 15. Taylor admitted to misusing investor funds intended for CluCoin, channeling them into his online gambling addiction. His fraudulent activities began after the initial coin offering (ICO) of CluCoin on May 19, 2021. Despite promising a charitable focus, Taylor diverted investors’ money to personal accounts and online casinos between May and December 2022.
In an effort to return the stolen funds, the FBI will distribute NFTs to identified victims, a unique approach that underscores the agency’s commitment to leveraging new technologies in criminal investigations. The U.S. Attorney’s Office has urged anyone who believes they were defrauded by CluCoin to come forward with relevant information.
Taylor, who publicly apologized in January 2023, is scheduled for sentencing on October 31 and could face up to 20 years in prison. The FBI has also issued warnings about other crypto-related scams, including those involving fake job advertisements and scammers impersonating crypto exchange affiliates.