Nfts
Feds Accuse UK Nationals in $3 Million Ethereum NFT Scam “Evolved Apes”
Three British nationals are accused of orchestrating a $3 million scam linked to the “Evolved Apes” NFT collection, the US Department of Justice announced Thursday. Mohamed-Amin Atcha, Mohamed Rilaz Waleedh and Daood Hassan are accused of electronic fraud and money laundering. the authorities called a pump and dump system.
The DOJ said the charges stemmed from a 2021 program to encourage NFT collectors to buy one of the “unique 10,000” Ethereum-base NFT called Evolved Apes which could later be used in an online battle royale game. The defendants fled with 798 ETH, worth approximately $2.7 million at the time.
“As alleged, the defendants conducted a scam to drive up the price of digital artwork by making false promises regarding the development of a video game,” said the U.S. Attorney for the Southern District of New York , Damian Williams, in a press release. “They allegedly took investors’ funds, never developed the game and pocketed the profits.”
The DOJ alleges that Atcha and Waleedh aggressively promoted Evolved Apes, including hiring an anonymous social media influencer to block the project.
A pump and dump scheme is when investors are lured into buying an asset based on misleading information. The fraudster uses early interest to drive up the price of the asset, only to then sell everything and disappear – or “pull the rug out” – leaving unwitting victims holding worthless tokens.
Depending on the case documents, Waleedh identified himself as Evolved Apes’ primary marketing manager when he attempted to withdraw funds stuck on an anonymous cryptocurrency exchange the group was using. When Waleedh was allowed access to the funds, the DOJ claimed, he transferred them to a cryptocurrency address controlled by Hassan.
“Digital art may be new, but the old rules still apply: making false promises of money is illegal. As we allege, thousands of people believed these false promises and were lured into purchasing these NFTs, including here in the Southern District of New York,” Williams said. “NFT fraud is not a game and those responsible will be held accountable.”
If convicted, the trio faces a maximum sentence of 20 years in federal prison.
Rug pulls are commonplace in the cryptocurrency space. More recently, two rug pulls made headlines, including in May when an alleged “mother and son” duo hosted a scandalous livestream to pump the “LIVEMOM” token and pocketed $300,000. This was followed by another scheme in which a pseudonymous creator tricked the “HANDS” piece of money.
“I don’t have any hands, I can’t beat you guys, relax,” the creator said during a livestream on Twitch channel NoHandsNoRug, later revealing his hands before selling all 7 SOLs accumulated under the program, worth approximately $1,000.
Edited by Ryan Ozawa.