Nfts
New York prosecutors bring fraud charges against Evolved Apes NFT
The United States Attorney’s Office for the Southern District of New York has charged three people — Mohamed-Amin Atcha, Mohamed Rilaz Waleedh and Daood Hassan — for electronic fraud and money laundering in connection with the 2021 “Evolved Apes » NFT Rug Pull Scam.
Evolved Apes was a collection of 10,000 unique NFTs that promised buyers a video game, which never came to fruition. A week after launch, the anonymous developer known as “Evil Ape” disappeared with 798 Ethereum (ETH) worth $2.7 million at the time. U.S. Attorney Damian Williams said:
The defendants ran a scam aimed at driving up the price of digital artwork through false promises about developing a video game. […] They allegedly took investors’ funds, never developed the game, and pocketed the profits. Digital art may be new, but the old rules still apply: making false promises of money is illegal.
In the world of cryptographyThis type of scam is known as a “rug pull”: developers raise funds, in most cases through token or NFT sales. After accumulating enough assets, they abruptly stop the project and disappear with the money.
“Rugpull” scams in crypto
According to De.Fi’s Rekt databasemore than $79.7 billion has been lost to crypto bad actors since 2011. The largest rugpull listed is South African digital asset investment fund Africrypt, which disappeared with 69,000 Bitcoins ( BTC) worth nearly $4.8 billion in 2021.
Report recently follows a cryptocurrency trader Lose $69 Million in Sophisticated “Address Poisoning” Scam. In this type of scam, bad actors create fake accounts imitating the victim’s online crypto address and send small amounts, hoping that the victim will accidentally send money to the fake address later.
Cryptocurrency scams, including “pig slaughter” scams, are becoming more prevalent and costly for investors. Late last year, U.S. authorities capable of recouping approximately $500,000 assets lost due to pig butchery scams.
In mid-March, prosecutors in Massachusetts also took steps to return $2.3 million in digital assets seized from fraudsters to victims of scams linked to pig butchery.