The U.S. Justice Department announced Thursday it had arrested and filed criminal charges against the founder of an NFT project it alleges “rug pulled” holders and defrauded them of $2.9 million in cryptocurrency.
Aurelien Michel was 24, founder of Ethereum NFT Collection Mutant Ape Planet. Federal authorities arrested Michel last night at JFK Airport in New YorkvCitvy for wire fraud. Michel, a French citizen resides in United Arab Emirates (UAE).
The move constitutes the third time federal prosecutors have pursued charges against orchestrators of so-called NFT rug pulls—schemes where an NFT project’s creators sell NFTs on false promises of community benefits, utility, and financial perks, only to abandon the project and make away with investors’ funds.
In this instance, the DOJ alleges Michel promised Mutant Ape Planet NFT holder giveaways, tokens that have staking features and merchandise collection, but he never kept his word and instead took almost $3,000,000.
Federal prosecutors collaborated with the Department of Homeland Security and the Internal Revenue Service in this case.
Making matters more complicated for Michel is the fact that prosecutors claim they have evidence that he conceded in a social media chat with current and prospective Mutant Ape Planet NFT purchasers that he had indeed choreographed a rug pull, but only—allegedly—in response to the conduct of the Mutant Ape Planet community.
“We never intended to rug, but the community went way too toxic,” Michel allegedly told holders.
“Michel can no longer blame the NFT community for his criminal behavior,” Thomas Fattorusso, IRS Acting Special Agent-in-Charge, said in a statement. “ His arrest means he will now face the consequences of his own actions.”
The DOJ will be launching its June campaign Similar charges were also filed The $2.6 million was spent on a lawsuit against the Baller Ape Club NFT collection of rug-pulling holders. The department’s first-ever rug pull case, against creators of the Frostie NFT projectAccording to the report, Frostie creators defrauded $1.1 million holders.
Rug pullings are a frequent occurrence in NFT trading’s high-volume, anonymous, and largely unregulated world. It generated $25 billion in sales last year.
Despite the commonality of such incidents, though, today’s action marks only the third occasion in which federal prosecutors have pursued charges for them.