Mutant Ape Planet NFT developer charged with fraud for selling ‘worthless asset’

The Department of Justice for the Eastern District of New York dismissed a criminal complaint on January 5 against Mutant Ape Planet developer Aurelien Michel for defrauding investors.

Michel was arrested at JFK Airport on January 4 and will appear before a magistrate within 24 hours.

This is the first time such charges have been brought against an NFT project in the Eastern District of New York.

Further, the language of the complaint emphasized that “none of the promised benefits were provided” to holders of Mutant Ape Planet NFTs. Instead, Michel allegedly failed to deliver on the project’s roadmap and siphoned funds into his own wallet. The complaint also referred to the NFTs without the “promised benefits” as a “worthless asset.”

United States Attorney for the Eastern District of New York Breon Peace commented,

“As alleged, the defendant used a traditional criminal scheme to defraud consumers eager to participate in a new market for digital assets. 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.”

The charges stated that Miche “falsely promised a variety of rewards and benefits designed to increase the demand for, and the value of, their newly acquired NFTs.” The alleged “rug pull” resulted in Michel attempting to abscond with $3 million in investors’ funds.

Mutant Ape Planet offered “exclusive opportunities for additional investments, giveaways, merchandise and other rewards.” Investors received NFT but no additional benefits. Thus, failure to deliver the benefits listed in the roadmap has been made a criminal offense in New York.

Michel reportedly said in a Discord chat that “we never intended to incubate, but the community became way too toxic.” However, Michel went by the pseudonym “James” to hide his real identity.

The project was minted in February 2022 for 0.15 ETH. However, the smart contract had a “release” feature that allowed Michel to move funds to personal wallets. He was identified due to the wallet being in an exchange account that he had KYC’d.

While a $3 million NFT blanket move may be an unfortunate normality in the crypto space, the DoJ prosecuting a project for failing to deliver on additional benefits could be a landmark moment for NFT regulation. Should the complaint also lead to a conviction, it will set a precedent for NFT projects.

Much of the NFT space is a wild west in terms of regulation. With defined guidelines from governing bodies, the clarification will come from the courts.