NY Court Charges Three Individuals Linked To $3 Million NFT Scam

The United States Attorney for the Southern District of New York announced the indictment of three UK nationals for the $3 million ‘Evolved Apes’ NFT (non-fungible tokens) scam. The suspects face charges of wire fraud and money laundering.

‘Evolved Apes’ $3 Million NFT Rug Pull

On Thursday, Damian Williams, Attorney for the Southern District of NY, and James Smith, Assistant Director of the New York Field Office of the Federal Bureau of Investigation (“FBI”), revealed the charges against three individuals seemingly linked to the Evolved Apes rug pull.

As reported by Bitcoinist, in 2021 the anonymous developer of the ‘Evolved Apes’ NFT project, Evil Ape, vanished with the project’s funds. The project was described as “a collection of 10,000 unique NFTs trapped inside a lawless land.”

In a week, ‘Evolved Apes’ raised around $2.9 million in Ether (ETH) after promising to develop a fighting game for its community. However, those promises soon vanished when the team drained the project’s wallet, taking all 798 ETH, and deleting the project’s X account and official website.

According to a Vice report, investors noticed several red flags leading up to the rug pull. Investors told the news media outlet that, after the public sale of the NFTs, the announcements were “unprofessional,” and the team disengaged with the project. Despite the concerns, they believed the ‘Evolved Apes’ NFT was inexperienced.

Suspects Face Fraud And Money Laundering Charges

Three years later, the identity of the suspected developers has been revealed. A NY court indicted UK nationals Mohamed-Amin Atcha, Mohamed Rolaz Waleedh, and Daood Hassan for laundering “misappropriated funds through multiple cryptocurrency transactions” to “conceal their ill-gotten gains.”

The suspects were charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. If guilty, they could face up to 20 years in prison for each charge.

The US Attorney Williams explained that those scamming investors, no matter the medium or industry, should be held accountable for their fraudulent actions. He stated:

Digital art may be new, but old rules still apply: making false promises for money is illegal.  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.

Similarly, FBI Assistant Director in Charge James Smith stated that the FBI is committed to tracking scammers:

 Ghosting customers without fulfilling a promise not only reflects poor business integrity, it also violates the implicit trust buyers place in sellers when purchasing a product, no matter if that product is in a store or stored on a blockchain.  The FBI remains committed to pursuing those who perpetrate fraudulent schemes out of a selfish desire for a quick profit.

It’s worth noting that since 2021, the NFT marketplace has seen a significant decline from its glorious days during the last cycle. A recent report revealed that the once-buzzing NFT market is now full of collections with zero value.

NFT investors’ and collectors’ interest has drastically declined in the last two years, and 95% of NFTs have become worthless. Consequentially, 75% of the digital artwork and collectibles that once could be sold for up to $91.8 million are valued below $100 in 2024.