Aurelien Michel, a French national living in the United Arab Emirates (UAE) and creator of Mutant Ape Planet non-fungible tokens (NFTs), has been charged with defrauding investors of more than $2.9 million in cryptocurrency in a “rug-pull scheme.”
Michel was arrested on January 4 at John F. Kennedy International Airport in New York. The charges against the NFT developer allege that he facilitated a “rug pull” scheme, falsely promising “rewards, raffles, exclusive access to other cryptocurrency assets, and the support of a community wallet with funds to be used to market the NFTs,” to pump demand and increase the value of the NFTs (a rip-off Mutant Ape Yacht Club NFTs), without intending to deliver on those promises.
“Purchasers of Mutant Ape Planet NFTs thought they were investing in a trendy new collectible, but they were deceived and received none of the promised benefits,” said Ivan J. Arvelo, Special Agent-in-Charge, Homeland Security Investigations (HSI) in the news release.
According to Thomas Fattorusso of the Internal Revenue Service-Criminal Investigation (IRS-CI) in New York, after all the NFTs in the collection were sold, Michel allegedly stopped communicating with the NFT buyers and proceeded to withdraw the payments amounting to nearly $3 million worth of crypto from the company’s wallets.
The 24-year-old developer is also alleged to have admitted to the fraudulent rug pull in a social media chat with current and prospective buyers, but blamed the NFT community for his actions, stating, “we never intended to rug but the community went way too toxic.”
The rug-pull scheme is a well-known tactic in the crypto world. It involves creators attracting investors to a project, only to abandon or withdraw liquidity before anything is completed. It accounts for a majority of scams in 2021 with a total of 119 incidents and $200 million in stolen funds.
READ: Coffeezilla vs. Logan Paul & CryptoZoo, Explained
The sector, which leans heavily on wash trading or artificial trades created for the sole purpose of pumping value, has seen sales and values drop significantly this year, along with the value of the broader digital assets landscape following the many scandals that have rocked the space in the past few months.
Michel’s arrest could spell the beginning of the crackdown on NFT scams and closer scrutiny of its operations — especially in the wake of increasing calls for regulation in the space.
READ: Celebrities Are Getting Sued Over NFT Endorsements
“Protection from fraud and manipulation extends to all consumers and investors, including those participating in the fast-evolving market for NFTs and other crypto assets. Our Office is committed to bringing to justice any criminal actor abusing any markets for their own gain,” Breon Peace, United States Attorney for the Eastern District of New York, commented on the charges.
Information for this story was found via the US Department of Justice, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
