The FBI has announced that it will use non-fungible tokens (NFTs) to help return stolen funds to victims of a cryptocurrency fraud scheme tied to CluCoin, a project launched in 2021.
On August 21, the U.S. Attorney’s Office for the Southern District of Florida stated that CluCoin founder Austin Michael Taylor pleaded guilty to wire fraud.
Taylor had transferred $1.14 million of investor funds from CluCoin to his personal account, misusing money raised in CluCoin’s initial coin offering (ICO) in May 2021. The ICO funds were originally intended for CluCoin-related projects.
Taylor then shifted his attention to new ventures, including the creation of NFTs, a computer game, and a metaverse platform. Despite these public initiatives, Taylor eventually used the money to gamble online.
In January 2023, Taylor publicly apologized for his actions, acknowledging his gambling addiction and expressing remorse for misusing investor funds. He also agreed to pay back $1.14 million in restitution to victims of the fraud.
As part of the restitution process, the FBI will notify victims who have been identified through NFTs. The agency also encouraged anyone who invested in CluCoin or believes they are a victim, and those who received NFTs, to provide additional information to the FBI through a dedicated webpage.
Meanwhile, Taylor is scheduled for sentencing on October 31, 2024. He faces a potential prison sentence of up to 20 years for his wire fraud conviction.
This case is one of many recent examples of fraud schemes in the cryptocurrency space. Earlier in May, authorities arrested Aiden Pleterski, known as the “Crypto King,” after months of investigation and complaints from investors. In another high-profile case, Sam Bankman-Fried, the founder of the now-defunct crypto exchange FTX, was sentenced to 25 years in prison in March for his role in the exchange’s collapse.
