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Three UK Nationals Charged In $2.7 Million NFT Scam

The FBI has charged three British men with conspiracy to commit wire fraud and money laundering in connection with an alleged NFT scam dubbed “Evolved Apes.” Mohamed-Amin Atch, Mohamed Rilaz Waleedh, and Daood Hassan, all 23, are accused of defrauding investors by falsely claiming that the purchase of Evolved Apes NFTs would fund the development of a video game.

According to a statement from the United States Attorney’s Office for the Southern District of New York, the trio allegedly siphoned off $2.7 million from thousands of investors in 2021. Instead of using the funds to develop the promised video game, they allegedly transferred the money to personal accounts.

This type of scam, known in the cryptocurrency industry as a “rug pull,” involves launching a digital project, attracting public investment, and then abruptly shutting down the project and disappearing with the funds. The defendants are said to have promoted and sold 10,000 Evolved Apes NFTs, promising that the proceeds would support charitable causes and the creation of a video game.

The project assured investors that profits would be allocated to a community wallet, donations to charities for endangered apes, efforts to combat global hunger, and the creation of prosthetic limbs. The video game, they claimed, would enhance the value of the NFTs. However, the game never materialised, and the project’s website was eventually shut down.

Coindesk, which first reported the unsealed indictment, revealed that the project’s anonymous developer, Evil Ape, vanished a week after its launch, taking 798 ether (equivalent to $3 million today, $2.7 million at the time) from its funds.

US Attorney Damian Williams and FBI New York Field Office Assistant Director James Smith stated that the stolen funds were funnelled through multiple cryptocurrency transactions before landing in the personal accounts of Atch, Waleedh, and Hassan.

Each of the three men faces one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, with each charge carrying a maximum sentence of 20 years in prison.

The charges were announced on June 6 following the unsealing of the indictment against Atch, Waleedh, and Hassan.

Though it started out as an intriguing and creative project, Evolved Apes is now well-known for being a rug pull scam. The story of its rise and fall is a crucial lesson for the NFT community and investors. It emphasizes the importance of caution, thorough research, and scepticism in the face of lucrative but uncertain opportunities in the digital art and blockchain sectors.

The Evolved Apes saga significantly impacted the NFT space, serving as a stark reminder of the risks involved in the largely unregulated market. It highlighted the importance of due diligence and greater transparency and accountability in NFT projects. The incident also underscored the potential for exploitation in the rapidly evolving crypto landscape.

Meanwhile, Bored Ape Yacht Club (BAYC) remains one of the most influential and successful non-fungible token (NFT) projects in the burgeoning digital art and blockchain technology world. Launched in April 2021 by Yuga Labs, BAYC has quickly become a cultural phenomenon, drawing significant attention from the crypto community and mainstream media.

Its emphasis on community and utility set BAYC apart from other NFT projects. Each Bored Ape NFT acted as a membership card to an exclusive club, granting holders access to various perks. These included access to a members-only graffiti board called “The Bathroom,” exclusive events, and future NFT drops. Building a community around the NFTs added significant value beyond the artwork itself.

Bored Ape NFTs have transcended the digital art space to become a cultural icon. They have appeared in music videos, been used as avatars in social media profiles, and featured in merchandise and brand collaborations. The Bored Ape Yacht Club has also inspired numerous other NFT projects, contributing to the broader NFT boom.

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