NFTs
US charges three British citizens over ‘Evolved Apes’ NFT scam
U.S. federal prosecutors have charged three British citizens with conspiracy to commit fraud and money laundering for their involvement in a scam to sell non-fungible tokens, or NFTs, of digital artwork known as “Evolved Apes.”
Mohamed-Amin Atcha, Mohamed Rilaz Waleedh and Daood Hassan allegedly raised the prices of NFTs with false promises to develop a video game based on the characters. Prosecutors said thousands of people were tricked into buying NFTs.
“They allegedly took funds from investors, never developed the game and pocketed the profits,” said U.S. Attorney Damian Williams. in a statement. “Digital art may be new, but old rules still apply: making false promises of money is illegal.”
In an unsealed indictment, prosecutors alleged that the “rug pulling” scam occurred from March to September 2021, when the three men, each aged 23, advertised the development of a fighting game on a website that has since been deleted. .
“The site expressly linked gameplay to the value of NFTs,” prosecutors wrote in the indictment, explaining that the three men promised daily prize tournaments in which certain characters’ NFTs would increase in value depending on how many fights they won.
The alleged scammers made at least $2 million from their scheme just one day after the first sales of the NFTs on September 24, 2021. The site was shut down on October 5 of that year.
A cryptocurrency platform used by the alleged scammers quickly blocked Waleedh from withdrawing his “share,” prosecutors said. Waleedh allegedly called customer service and falsely claimed he needed the money to pay for his grandmother’s cancer treatment. In December of that year, certain of Hassan’s assets were frozen by the government.
Atcha, Waleedh and Hassan face up to 20 years in prison for each charge if convicted.
Evolved Apes should not be confused with Bored Ape Yacht Club, a similar project that sells NFTs of 10,000 anthropomorphized cartoon apes. Although Atcha, Waleedh, and Hassan began development on their project in March 2023, a month before the release of Bored Apes, Evolved Apes was apparently released later in the year.
Bored Apes, developed by Yuga Lubs, was hugely successful and caused the company to be valued at US$4 billion in 2022.
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