Five charged in France for $2.5 million fraud targeting owners of Bored Ape NFT
by James · October 13, 2022
Five people have been charged in France for allegedly fraudulently obtaining $2.5 million worth of non-fungible tokens (NFTs), mainly targeting Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) owners.
Prosecutors claimed the suspects used a phishing operation to obtain the assets, luring victims via a fake website that promised to animate their NFTs, according to Agence France Presse (AFP) reporting. Posted by Barron’s.
The charges against the suspects, who are all aged between 30 and 24, include “fraud committed as part of a criminal gang, concealing fraud and criminal association”.
The suspects, who carried out the scheme between late 2021 and early 2022, were based in Paris and the French cities of Caen and Tours.
Two of these subjects, who are said to have been the main leaders, have been detained, according to AFP’s reporting.
A parent of one of the accused was also arrested, but they have now been released without charge.
Deputy Head of the French Cybercrime Unit OCLTIC Christophe Durand said the investigation was originally sparked by a grassroots investigation by popular Twitter user “ZachXBT.”
ZachXBT describes himself as a “scout on chain” and a “rug pull survivor turned 2D detective” and has built a reputation for investigating crypto and NFT fraud cases for his audience of more than 300,000 followers.
IN a blog post ZachXBT detailed how Twitter user “Dilly Dilly” had his BAYC NFT stolen after he clicked on a link shared by “a verified member of the BAYC Discord” and he authorized a transaction on a website that “he was led to believe would produce an animated version” of his NFT.
He alleged that the accused then used the now-sanctioned Tornado Cash protocol to try to cover their tracks, having first sold the stolen tokens on NFT marketplace OpenSea.
NFT fraud is on the rise
Despite the fact that the total value of digital assets is far from its historical peaks, NFT scams seem to be flourishing.
Over $100 million worth of NFTs were stolen between July 2021 and July 2022 according to a report by blockchain analytics firm Elliptic.
The news comes at a time when the business practices of the company behind the Bored Ape collection, Yuga Labs, are under investigation.
Although the company has not yet been charged with any wrongdoing officially, the Securities and Exchange Commission (SEC) has currently investigating the startupif not named sources reported by Bloomberg is to be believed.
The report claims the watchdog is looking into whether the company has broken any federal laws by issuing NFTs that work in the same way as stocks.
The SEC is also reportedly investigating how YugaLab’s Ethereum-based ApeCoin is distributed.
