Three British people have been indicted on charges of facilitating a $3 million fraud involving the “Evolved Apes” NFT collection, the U.S. Department of Justice said Thursday. Mohamed-Amin Atcha, Mohamed Rilaz Waleedh and Daood Hassan were charged with fraud and money laundering in what authorities called a pump-and-dump scheme.
The DOJ said the charges stemmed from a 2021 scheme to have NFT collectors purchase one of “10,000 unique” Ethereum-based NFTs called Evolved Apes that could be used in an online battle royale game. The defendants stole 798 ETH, worth approximately $2.7 million at the time.
“The defendants engaged in fraud to increase the price of digital works through false promises of video game development,” Damian Williams, U.S. attorney for the Southern District of New York, said in a statement. “They say they took investor money, didn’t develop the game, and kept the profits.”
The DOJ alleges that Atcha and Waleedh aggressively promoted Evolved Apes, including hiring anonymous social media influencers to promote the project.
A pump-and-dump scheme involves encouraging investors to purchase assets based on incorrect information. The scammer uses the initial interest to drive up the price of the asset, but either sells everything and disappears, or suffers a “rug pull”, leaving the unwitting victim with worthless tokens.
According to case documents, Waleedh identified himself as a senior marketing manager for Evolved Apes when he attempted to withdraw funds locked up in an anonymous cryptocurrency exchange Evolved Apes was using. The DOJ alleged that when Waleedh was allowed access to the funds, he transferred the funds to a cryptocurrency address controlled by Hassan.
“Digital art may be new, but old rules still apply. It is illegal to make false promises for money. As we allege, thousands of people believed these false promises and were tricked into purchasing these NFTs, including here in southern New York,” Williams said. “NFT fraud is not a game, and those responsible will be held accountable.”
If convicted, the three men face up to 20 years in federal prison.
Rug pulling is rampant in the cryptocurrency space. Most recently, a couple of rug pulls made headlines, including in May when a “mother and son” duo made $300,000 by conducting a scandalous live stream to pump out “LIVEMOM” tokens. This was followed by another scheme by a pseudonymous creator to steal “HANDS” meme coins.
“I have no hands. I can’t put you down. Calm down,” the creator said in a live stream on the NoHandsNoRug Twitch channel, but revealed his hands before selling the 7 SOL he had accumulated in the scheme (worth about $1,000).
Edited by Ryan Ozawa.
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