Mutant Ape Planet NFT Collection Developer Pulled off a $3 Million Fraud; Here are the Details
How an NFT developer pulled off a fraudulent scheme
As art becomes digital, more sophisticated methods to fake it are also emerging. French developer, Aurelien Michel confessed to defrauding buyers in connection to the Mutant Ape Planet NFT collection, a knockoff of the popular Mutant Ape Yacht Club NFTs, per DOJ. The rug pulling scam netted nearly $3 million, resulting in legal action and potential prison time for Michel.
The 24-year-old French citizen residing in the United Arab Emirates was taken into custody after landing at John F. Kennedy Airport in New York. The arrest was followed by Michel's admission of guilt in a U.S. federal court where he pleaded guilty to charges related to the fraudulent scheme.
How the scam unfolded
Michel, along with unnamed accomplices, marketed the Mutant Ape Planet NFTs by enticing buyers with promises of rewards, raffles, exclusive access to other cryptocurrency assets, and support from a community wallet earmarked for NFT marketing. The defendants also made vague commitments about acquiring "metaverse land" for the NFT project. However, these promises proved to be deceptive. After selling all the NFTs, Michel and his associates allegedly transferred nearly $3 million in earnings to various wallets, including those under Michel's control.
Legal consequences and restitution
Michel faces a potential prison sentence of up to five years and has agreed to pay $1.4 million in forfeiture. The legal action against him signals a crackdown on fraudulent activities within the rapidly evolving digital asset space.
Regulatory awareness
U.S. Attorney Breon Peace emphasized the authorities' awareness of criminal actors exploiting the fast pace of innovation in the digital asset sector and investors' eagerness to participate in cryptocurrency. Action in the case reflects the commitment to curbing large-scale fraud and ensuring accountability.
Community reaction and Discord admission
When Mutant Ape Planet buyers became suspicious regarding these transfers, Michel, posing as "James" in the community's Discord channel, admitted to the rug pull.“We never intended to rug but the community went way too toxic,” Michel stated. He took full responsibility of the fiasco that was caused by their actions.
IRS interest in the NFT space
Thomas Fattorusso, Acting Special Agent-in-Charge with the Internal Revenue Service’s Criminal Investigation team, stated that Michel allegedly defrauded investors by making false representations, including giveaways, tokens with staking features, and merchandise collections. This case highlights the importance of regulatory vigilance in the crypto space and serves as a cautionary tale for investors navigating the NFT market. Michel's guilty plea underscores the consequences that individuals engaging in fraudulent activities may face contributing to the ongoing efforts to maintain integrity in the cryptocurrency ecosystem.