Feds Arrest Alleged French NFT Scammer at JFK Airport

An image of Mutant Ape Planet NFTs contained in court documents. (Photo via DOJ)

French citizens and foreigners living in the United Arab Emirates are now facing fraud charges in the United States for an alleged knock-off of a popular monkey-themed non-fungible token (NFT) project, federal prosecutors announced Thursday.

Aurelien Michel24, is accused of fraud in a criminal complaint that was opened on Thursday.

According to a press release issued by the US Attorney’s Office for the Eastern District of New York, the defendant was arrested Wednesday night at John F. Kennedy International Airport.

The 16-page criminal complaint does not specifically charge Michel with federal counts related to his alleged conduct. Rather, the filing cites the federal wire-fraud statute, outlines a broad so-called “rug pull” scheme, and alleges the defendants “engaged in the fraudulent conduct described [therein] and profited from the fraud.”

While NFTs are controversial, even among the wider crypto community, the concept behind them is simple enough. Each NFT is minted by using a specific amount of a given cryptocurrency and by uploading the image file that becomes the digital asset in question. Users also typically add identifying information to each NFT. Essentially, the process turns a piece of digital art into a public record stored on a public blockchain — a growing list of public records linked by cryptography that cannot be changed once created.

The most common blockchain for NFT development is the Ethereum network. And according to federal law enforcement, it’s the blockchain that was used by Michel in his scheme to defraud investors who bought nearly $3 million worth of “Mutant Ape Planet” NFTs.

The criminal complaint alleges that buyers of NFT were promised a “community focus” along with their investment that included, according to the project’s website and the official Discord chat associated with Mutant Ape Planet, a number of additional benefits.

According to the complaint, Michel allegedly announced that the project would: (1) include a $500,000 marketing budget to “support Mutant Ape Planet NFTs and increase demand (and thus value) of Mutant Ape Planet NFTs;” the launch of a merchandise collection featuring the artwork; the release of a separate token associated with the project for buyers that can be used to generate additional investment returns on decentralized financial applications; a way to facilitate raffles and distributions among the community; and promises “that the developers will acquire virtual land in the metaverse that will further benefit the NFT buyers.”

Instead, federal authorities allege, the defendants took the money and ran — which is called a “rug pull” in crypto parlance — by diverting the funds to various private cryptocurrency wallets.

“The representations made on the MAP website and in the MAP Discord were false,” the complaint alleges. “Purchasers of Mutant Ape Planet NFTs did not receive any of the promised benefits stated [by Michel]. Instead, the Mutant Ape Planet NFT project was a “rug pull” and the purchasers’ funds were partially diverted to the benefit of the defendants.”

The filing goes on to allege that Michel used the pseudonym “James” in Discord chats and eventually admitted to the fraud:

On or about June 4, 2022, “James | FOUNDER” posted a message to users in the MAP Discord channel saying in relevant part, “We never intended to hatch, but the community became way too toxic. I recognize that our behavior led to this…”

“When the NFTs were sold out, Michel allegedly stopped communicating and withdrew buyer funds from the company’s cryptocurrency wallets, lining his pockets with nearly $3 million of investors’ money,” IRS Acting Special Agent-in-Charge Thomas Fattorusso said in the press release. “Michel can no longer blame the NFT community for his criminal behavior. His arrest means he will now face the consequences of his own actions.”

In the criminal complaint, federal authorities allege that Michel was determined to be the person known as “James” through the use of an unidentified cryptocurrency exchange’s Know Your Customer information for an account allegedly linked to one of the cryptocurrency wallets used to empty the project’s box. .

“As alleged, the defendants used a traditional criminal scheme to defraud consumers eager to participate in a new market for digital assets,” U.S. Atty. Breon peace said in the press release. “Protection against fraud and manipulation extends to all consumers and investors, including those participating in the rapidly evolving market for NFTs and other crypto-assets. Our office is committed to bringing to justice any criminal actor who abuses markets for personal gain.”

Read the complaint and statement here.

[image via Eastern District of New York]

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