A French NFT developer has been detained on US federal charges that he defrauded purchasers of his digital collectibles for “Mutant Ape Planet” of almost $3 million.
Officials reported that Aurelien Michel, a 24-year-old French national who resides in Dubai, was detained on Wednesday night at New York’s John F. Kennedy International Airport.
Michel is accused of running a “rug pull” scam, in which an NFT developer sells digital collectibles with the promise of adding new features and rewards but then simply takes the money and runs. The criminal complaint against Michel was unsealed after his arrest.
Non-fungible tokens, or NFTs, are one-of-a-kind digital collectibles that have gained enormous popularity in recent years. Former President Donald Trump recently debuted an NFT collection.
But the novelty of the area and the allure of potentially sky-high returns have served as a magnet for con artists who prey on unsuspecting buyers using tried-and-true methods.
According to the prosecution, Michel engaged in such a scheme to defraud purchasers of his “Mutant Ape Planet” NFTs of $2.9 million.
The Mutant Ape collection appears to be a ripoff of several other, more well-known NFT lines that debuted the previous year and sold distinctive cartoon depictions of apes.
Early in 2022, the complaint claims, Michel debuted his Mutant Ape line, selling the cartoon gorillas for about $430 each.
As sales increased, buyers would receive a variety of benefits, according to the project website, including raffles and rewards paid for by the sale of the collection.
Prosecutors allege that Michel abandoned the project and stole the money for personal use, committing the so-called “rug pull” scam, rather than continuing to build the collection and providing buyers with the rewards he promised.
Breon Peace, US Attorney for the Eastern District of New York, released a statement in which he claimed that “as alleged, the defendant used a traditional criminal scheme to defraud consumers eager to participate in a new digital asset market.”
All consumers and investors, including those involved in the quickly developing market for NFTs and other crypto assets, are protected from fraud and manipulation, he continued.
After being confronted by Mutant Ape buyers on social media, Michel seemed to acknowledge that he had engaged in “rug pull,” but he also tried to place the blame on the NFT buyer community.
According to the complaint, he said in the Mutant Ape Discord chat, “We never intended to rug but the community went way too toxic.”
On Thursday, Michel made his first court appearance before United States Magistrate Judge James R. Cho.
He is reportedly detained at the Brooklyn Metropolitan Detention Center, according to federal records. It wasn’t clear if he was represented by an attorney.
NFTs keep track of who owns digital assets like photos, videos, collectibles, and even real estate in virtual worlds using the blockchain technology that powers cryptocurrencies.
Early in 2021, their popularity began to soar. The digital artist Beeple’s single NFT piece sold for $69.3 million at Christie’s, marking the first time a significant auction house has sold an item of art that has no physical form.
According to information from DappRadar, the top 10 platforms and marketplaces for NFT generated about $22.71 billion in volume in 2022.
This volume was only marginally lower than the $24.16 billion recorded in 2021, the peak of the NFT buying frenzy.
»French NFT developer Aurelien Michel arrested for scamming buyers of ‘Mutant Ape Planet’ $3M«