Aurelien Michel, the mind behind the “Mutant Ape Planet” non-fungible token (NFT) collection, confessed to defrauding $3 million in a federal courthouse in Brooklyn, New York, on November 14.
The NFT collection — essentially a replica of Yuga Labs’ “Mutant Ape Yacht Club” project — drew attention as Michel convinced investors to put their money into his project by promising various incentives like giveaways, additional investments, and merchandise. This occurred during a favorable period for NFTs when the trend was on the rise.
After accumulating $2.9 million, Michel abruptly abandoned the project, executing what is known as a “rug-pull” scam. In this fraudulent act, a cryptocurrency or NFT developer attracts investor funds by hyping a project, only to disappear suddenly, leaving investors empty-handed.
Michel was also accused of deceiving the Mutant Ape NFT community. Charged in January 2023, he acknowledged the fraudulent rug-pull but shifted blame to the NFT community, stating, “We never intended to rug, but the community went way too toxic.”
Awaiting sentencing, Michel faces a potential five-year prison term and has agreed to forfeit $1.4 million.
This case is part of a growing trend of legal actions involving NFTs.
Recently, Yuga Labs triumphed in an NFT copyright lawsuit against conceptual artist Ryder Ripps, who replicated Yuga Labs’ “Bored Ape Yacht Club” NFT art. The California federal judge awarded the company $1.6 million in damages and legal fees.
In February, Hermès won an intellectual property trial against Mason Rothschild’s NFT project “MetaBirkins,” receiving $133,000 in damages.