FBI Uses NFTs to Return $1.14M to Crypto Fraud Victims

According to a statement from the US Attorney’s Office in Florida on August 21, Austin Michael Taylor, 40, pled guilty to wire fraud on August 15. Taylor had diverted investor funds intended for his CluCoin (CLU) project to support his online gambling habit. The FBI plans to notify the identified victims of the restitution via NFTs, marking a notable instance of law enforcement using NFTs to reach out to victims.

The US Attorney’s Office has also asked anyone who believes they may be a victim of the fraud to provide relevant information to the FBI. Taylor, who operated online under the name DNPThree, launched CluCoin in 2021 with promises of a charitable focus. After raising funds, he conducted an initial coin offering (ICO) for CLU on May 19, 2021. Subsequently, Taylor turned his attention to minting NFTs, developing computer games, and proposing a metaverse platform.

Court documents reveal that Taylor organized a conference named “NFTCon: Into the Metaverse” at a Miami hotel on April 4, 2022, to generate interest in CluCoin and its associated ventures. Following the event, he began withdrawing funds from a crypto wallet holding a portion of CLU investor funds. Between May and December 2022, he transferred $1.14 million worth of investor funds to his accounts on various crypto exchanges before funneling the money to online casinos.

In January 2023, Taylor publicly apologized for his actions, acknowledging a gambling addiction and expressing deep remorse for misusing the investor funds. He has agreed to repay the $1.14 million as restitution. Taylor is set to be sentenced on October 31 and faces up to 20 years in prison for wire fraud.

On August 2, the FBI issued a warning to web users about scammers posing as crypto exchange affiliates to steal funds. Additionally, on June 4, the FBI warned of a rise in work-from-home job advertisement scams involving crypto, where scammers create fake job offers to steal digital assets.