NY Attorney charges 3 tied to 'Evolved Apes' NFT scam

Three British nationals tied to the “Evolved Apes” nonfungible token “rug pull” scam have been charged in the United States for conspiring to commit wire fraud and money laundering.

The defendants, Mohamed-Amin Atcha, Mohamed Rilaz Waleedh and Daood Hassan, allegedly drove up the prices of 10,000 NFTs on false promises that they would develop a video game before transferring the funds out and abandoning the project, the United States Attorney’s Office in the Southern District of New York said in a June 6 statement.

“Digital art may be new, but old rules still apply: making false promises for money is illegal [...] NFT fraud is no game, and those responsible will be held accountable,” iterated U.S. Attorney Damian Williams.

FBI Assistant Director James Smith added: “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.”

In total, nearly 800 Ether (ETH) — worth $2.7 million at the time — was allegedly stolen from the rug pull.

“They allegedly took investor funds, never developed the game, and pocketed the proceeds,” Williams said.

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Atcha, Waleedh and Hassan raked in more than $2 million from Evolved Ape NFT sales on the first day, which the U.S. Attorney’s Office believes took place on Sept. 24, 2021 — in the middle of “NFT summer.”

Its website listed “roadmap” and phases” subsections to make the NFT project seem legitimate, the U.S. Attorney claimed. “Phase 5” claimed that Evolved Apes would launch a fighting game that could only be accessed by Evolved Ape NFT holders.

But the Evolved Apes website was taken down less than two weeks later, on Oct. 5, 2021, leaving investors stranded.

Interestingly, Waleedh transferred the stolen funds to a personal, custodied wallet address but the cryptocurrency exchange blocked him from withdrawing the funds.

It planned to first “investigate the source” of the funds, but the customer service team reenabled the withdraw function after Waleedh falsely stated that he needed the funds to pay for his grandmother’s cancer treatment, according to the U.S. Attorney’s Office.

The U.S. Attorney’s Office wants the three defendants to forfeit $875,850 in Tether (USDT) held in wallet address “0x519…6ed70.”

The conspiracy to commit wire fraud and money laundering charges each carry a maximum 20-year prison sentence in New York.

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