Three UK Men Charged in Alleged “Evolved Apes” NFT Scam

News | June 19, 2024 By:

On Thursday, June 6, 2024, the U.S. Attorney’s Office, Southern District of New York announced that three United Kingdom nationals have been charged in connection with an alleged scam involving non-fungible tokens (NFTs). Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan, all 23 years old, were indicted on charges of wire fraud and money laundering conspiracy related to their promotion and sale of a series of NFTs called “Evolved Apes”.

According to the unsealed indictment, Atcha, Waleedh, and Hassan created and marketed the Evolved Apes NFT collection in fall 2021. They advertised cartoon ape-themed digital images that could be purchased as NFTs. NFTs are unique digital assets that utilize blockchain technology to record ownership. The defendants allegedly promoted the NFT project by publicly claiming the funds raised from sales would be used to develop a video game featuring the ape characters. This, they said, would increase the value of the Evolved Apes NFTs.

Prosecutors say hundreds of individuals purchased the Evolved Apes NFTs, some from within the Southern District of New York, in reliance on the promise of an accompanying video game. However, shortly after the initial sales, Atcha, Waleedh, and Hassan allegedly shut down the website associated with the project and kept the funds without starting any game development. It is accused that they then transferred the funds through complicated cryptocurrency transactions in an effort to obscure the money trail to their own personal cryptocurrency wallets and bank accounts.

If convicted, the defendants each face a maximum of 20 years in prison on each count. U.S. Attorney Damian Williams called the alleged actions a “rug pull” scam, where cryptocurrency or NFT developers take money from initial buyers and abandon the project while retaining the funds. He stated that “making false promises for money is illegal” and “NFT fraud is no game.” FBI Assistant Director James Smith commented that beyond poor business practices, the accused “violate[d] the implicit trust buyers place in sellers.”

The indictment did not reveal precisely how much money was allegedly taken in by the Evolved Apes NFT scheme. However, NFT sales cumulatively reached billions in 2021 as the niche digital asset market surged in popularity. Prominent NFT collections like Bored Apes have individual ape NFTs sold for hundreds of thousands, making associated projects lucrative targets for such alleged “pump and dump” scams. Individuals are warned to carefully vet NFT drop creators and roadmaps, as there are few protections against fraudulent misuse of funds in the crypto asset space.