NFT developer charged in $2.9 million fraud scheme
Cryptocurrency fraud, fraud management and cybercrime
Prosecutors say the 24-year-old Mutant Ape Planet organizer defrauded investors
Prajeet Nair (@prajeetspeaks) •
7 January 2023
US authorities in New York arrested a French citizen living in the United Arab Emirates and charged him with defrauding buyers of Mutant Ape Planet NFT, a type of digital asset, saying he defrauded investors of more than $2.9 million.
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The authorities arrested Aurelien Michel (24) on Wednesday at John F. Kennedy Airport in New York. He is charged with fraud for allegedly pulling off a $2.9 million carpet move.
A straw move is a scam in which the creator of non-fungible tokens or other digital assets solicits investments from unsuspecting victims, only to abandon the project abruptly and keep the investors’ funds.
Under the scheme, Michel promoted Mutant Ape Planet NFTs to buyers, with the false promise of a series of rewards and benefits designed to increase demand for their newly acquired assets and increase the NFT’s value.
“None of the promised benefits were provided. Instead, millions worth of NFT buyers’ cryptocurrency was diverted to Michel’s personal benefit,” the US Department of Justice says.
Case details
According to the criminal a href=” target=”_blank”>complaint, Homeland Security Investigations’ Dark Web and Cryptocurrency Task Force has been investigating this scheme since April 2022.
Mutant Ape Planet NFTs are a form of digital asset that can be bought, sold and transferred on the Ethereum blockchain. Each Mutant Ape Planet NFT was unique and gave buyers exclusive ownership of each NFT.
“The NFTs were marketed with promises of exclusive benefits potential buyers would receive,” the court document states. “These benefits included exclusive opportunities for additional investments, giveaways, merchandise and other rewards.”
When the buyers became suspicious, Michel, who operates under the pseudonym “James,” admitted he had pulled the curtain on the MAP Discord, the court document said. He said he “never intended to brood, but the community became far too toxic” and that this “behavior led to this.”
Michel reportedly accesses Discord servers using IP addresses that were all assigned by the UAE provider.
“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,” said Thomas Fattorusso, Acting Special Agent, Internal Revenue Service-Criminal Investigation, New York.
Other recent rugs
Blockchain Investigator ZachXBTclaimed that Michel also pulled the curtain on the well-known Crazy Camels and Fashion Ape NFT collections.
ZachXBT found Michel’s CEX address provided in the court document by following the 356.44 ETH transaction that emanated from the Mutant Ape Planet smart contracts and found that the team members of Fashion Ape NFT received $1.1 million from the owners, while Crazy Camels received 1, 6 million dollars.
In 2021, carpet pulling accounted for 37% of all cryptocurrency fraud revenue, or $2.8 million in cryptocurrency, compared to just 1% in 2020, according to a report by blockchain research firm Chainalysis.
In March 2022, two 20-year-olds were arrested and charged in Los Angeles, California with conspiring to commit wire fraud and money laundering as part of a million-dollar scheme involving NFTs. Both charges carry a maximum sentence of 20 years in prison. (See: 20-year-olds charged in NFT ‘Rug Pull’ fraud case).
