KEY POINTS
Three individuals behind the “Evolved Apes” non-fungible token (NFT) collection have been charged in the United States with wire fraud and money laundering.
The defendants, Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan, are accused of purposefully inflating the prices of the collection — which comprises 10,000 Ethereum-based NFTs — by promising to develop a video game based on the digital collectibles.
However, the game never came to fruition, and the defendants pocketed 798 ETH, worth roughly $2.7 million, of investors’ funds.
Damian Williams, representing the United States Attorney’s Office in the Southern District of New York, stated on June 6, “As we allege, thousands of people believed these false promises and were tricked into buying these NFTs, including here in the Southern District of New York. NFT fraud is no game, and those responsible will be held accountable.”
Atcha, Waleedh, and Hassan, all from the United Kingdom, now face charges of conspiracy to commit wire fraud and conspiracy to commit money laundering. Each charge carries a maximum sentence of 20 years in prison.
This case is part of a growing trend of scams in the NFT market.
Last month, Coffeezilla accused AI firm Rabbit of conducting an NFT scam with false promises of a gaming metaverse and a carbon-negative cryptocurrency.
In another case, US Air Force analyst Devin Alan Rhoden was accused in January of orchestrating a “rug pull” NFT scam with the UndeadApes project, resulting in charges of money laundering and making false statements.
As NFTs gain popularity, so do related scams. In response to these increasing risks, the U.S. Treasury released its first NFT risk assessment last month, highlighting the sector’s vulnerabilities to fraud, theft, and market manipulation. The report called for stronger regulations and increased awareness to safeguard market integrity and protect consumers.
Additionally, other countries are taking steps to combat NFT fraud. For instance, China officially declared NFT theft a crime last November.
