FX168 Financial News Agency (Asia Pacific) The U.S. federal government said on Wednesday (August 21) that victimized investors on Binance Chain (BNB Chain) will receive notifications through non-fungible tokens (NFTs) after the co-founder of the CluCoin project pleaded guilty to wire fraud in federal court.
According to Decrypt, Austin Michael Taylor, who launched CluCoin (CLU) in 2021, admitted to transferring $1.14 million worth of investor funds to a personal account on a cryptocurrency exchange. Law enforcement authorities said the funds were raised through the project's ICO and were intended to be used to develop projects related to CluCoin, but Taylor later lost the funds while gambling at several online casinos.
Taylor streamed on Twitch under the username DNP3, amassing 242,000 followers on the platform. Using existing social media accounts, Taylor initially told investors that CluCoin would "provide ongoing income for charitable projects of the community's choice," while the project's focus later shifted to developing video games and a metaverse platform.
"Tyler never disclosed to investors that he intended to and had gambled away CLU investors' funds until approximately January 3, 2023, when Taylor publicly apologized and acknowledged that he had mistakenly gambled away investors' funds," prosecutors alleged in July.
The U.S. Attorney's Office for the Southern District of Florida said in a press release that identified victims in the CluCoin project will be notified via NFTs. This is the first time in all DOJ notifications that NFTs have been used to establish law enforcement communications with victims.
Several investors found through the project's official Telegram channel also told Decrypt that they have not yet received NFTs issued by authorities in the wallets they used to invest in CluCoin.
“I personally lost over $2,000 and the trust of several family members who I had persuaded to share some of the money,” said a CLU investor named Kevin, who declined to give his last name.
“It was a humiliating ordeal,” said a CLU investor named Vlad, who described CluCoin’s community as “vibrant and engaged.”
He said he trusted Taylor after “the project got off the ground” and had been keeping a close eye on CluCoin before Taylor suddenly disappeared.
Three months after CluCoin launched, its market cap peaked at $17 million. Today, CLU is worth about $62,000, with less than $5 in trading volume in the past day.
"I'd be very grateful if the FBI's involvement would allow me to recover some of my losses," Vlad said. "But I don't hold out much hope of getting my $1,000 back."
NFTs have been used in at least one U.S. court case before as a way to issue formal legal notices. In 2023, The Crypto Lawyers served hackers who stole $970,000 from someone's self-hosted wallet and used NFTs to deliver official court documents.
"We are pleased to see the Southern District of Florida advance the legal framework based on our landmark case precedent, a development that highlights the importance of adapting legal practices to emerging technologies," said Rafael Yakobi, managing partner of Crypto Lawyers.
Prosecutors allege that Taylor hosted an event called "NFTCon: Entering the Metaverse" at a Miami hotel in April 2022 to attract investors. He also guaranteed that funds transferred to the wallet for CluCoin-related projects would be used for legitimate purposes, prosecutors said.
Taylor’s attorney, Benjamin Ryan Stechschulte of Stechschulte Nell, noted in a statement: “He accepted responsibility and Taylor had no further comment.”
Taylor faces up to 20 years in prison for wire fraud, the U.S. Department of Justice said in the aforementioned press release. The developer and streamer is scheduled to be sentenced by U.S. District Judge Jacqueline Becerra on Oct. 31.
Bitcoinist