A fraudulent scheme involving the sale of non-fungible tokens (NFTs) known as the Evolved Apes collection has been exposed, leaving investors stranded.
The creators, Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan, all United Kingdom nationals, are facing charges of conspiracy to commit wire fraud and money laundering. The trio allegedly promised to develop a video game related to the NFT collection but vanished with investors’ funds after a week, in what is known as a rug-pull scam.
The accusations allege that Atcha, Waleedh, and Hassan organized a classic rug pull scam, where they advertised the Evolved Apes NFT project, collected funds from purchasers under the promise of developing a video game, and then disappeared with the funds.
The scheme sold digital images of cartoon apes as NFTs to use the proceeds to improve the video game as planned. However, after raising substantial sums from purchasers, including in the Southern District of New York, the defendants shut down the project’s website and kept the funds without fulfilling their promises.
Despite the disappearance of the creators and the unraveling of the fraudulent scheme, trading of Evolved Apes NFTs on platforms like OpenSea continued.
FBI Assistant Director James Smith said, “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.”
Waleedh, after allegedly stealing cryptocurrency, made a critical mistake. He transferred the stolen funds to a personal wallet address that was held by a custodian (a third-party service that manages the wallet). This custodian, fortunately, blocked him from withdrawing the money.
Initially, the custodian planned to investigate the origin of the funds before allowing a withdrawal. However, Waleedh lied to customer service, claiming he urgently needed the money for his grandmother’s cancer treatment, according to the U.S. Attorney’s Office.
Afterward, a new project called Fight Back Apes emerged, started by the affected community. Unlike Evolved Apes, Fight Back Apes operates with a multi-signature wallet to ensure transparency and prevent similar incidents in the future.
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