The developer of Mutant Ape Planet NFT, a knock-off collection of popular NFT collection Mutant Ape Yacht Club, has been arrested in New York after the US Justice Department filed criminal charges against him for scamming investors of US $2.9 million through a ‘rug-pull’ scheme.
The incident is the third time that federal prosecutors in the US have pursued charges against perpetrators of NFT rug-pulls. Rug-pulls is a type of exit scam where the founders or the project creators suddenly abandon the project or withdraw liquidity from the project.
In rug-pulls, founders or creators sell NFT on false promises of community benefits, utility and financial perks, only to abandon the project and run away with the funds of the investors. Incidentally, rug-pulls were the most common type of attack in 2022 and accounted for 119 incidents and more than US $200 million in stolen funds.
In the latest case involving Mutant Ape Plant, its 24-year old developer, Aurelien Michel, has been accused of deceiving investors who thought they were investing in a trendy new digital collectible but ultimately received none of the promised benefits. Mutant Ape Planet NFT sought to take advantage of the broader Ape-themed NFT trend in 2022.
Mutant Ape Planet is a collection of 6,797 NFT which was launched on the Ethereum blockchain network. The floor price of the NFT was 0.05 ETH or around US $468 at the time of their launch in 2022. The collection has had a total of 567 Ether in sales but has seen its average price and sales volume crater.
According to the complaint filed on January 3, 2023, Michel and other unnamed accomplices promised the buyers that their purchases would come with benefits including rewards, raffles, exclusive access to other crypto currency assets and the support of a community wallet with funds to be used to market the NFT.
Michel, a French national who lived in the United Arab Emirates, said the exclusive rewards and benefits were designed to increase demand for the unique images and boost their value. The project developers also made vague promises about acquiring land in the metaverse for the NFT project and promised tokens with staking features and launching merchandise collections.
However, none of the promises were fulfilled and Michel and his other accomplices allegedly transferred nearly US $3 million in earnings to other wallets, including to some wallets that are controlled by Michel himself.
When these transfers caused suspicion among the buyers, Michel used a pseudonym to admit to the rug-pull. He also said the intention “was never to rug but the community went way too toxic”. The holders of the collection took to social media to counter and share their side of the story.
They said they became skeptical because of the lack of activity from the founders until the founders disappeared suddenly with no notes. The project has since been taken over by the community who is attempting to breathe some life back into it. it is believed that a user with the pseudonym HTMadge has taken up an active role and is spearheading the project.
Meanwhile, some data suggest that Michel made away with millions of dollars from multiple other similar frauds. Prominent blockchain analyst ZachXBT connected Michel’s Binance address to accounts linked to two other prominent rug-pulls, Fashion Ape NFT and Crazy Camels.
Fashion Ape NFT founders collected US $1.1 million from holders before abandoning the project while Crazy Camels made US $1.6 million before doing the same.
The Department of Justice’s complaint against Michel made no mention of his participation in any other alleged rug-pull schemes beside Mutant Ape Planet. ZachXBT used identifying information regarding Michel’s crypto currency accounts referenced in the complaint to track down the founder’s Binance account.
That account was linked to several other allegedly fraudulent NFT projects. Moreover, the Crazy Camels website, which has now been deleted, links the profiles of one of the project’s co-founders to Michel’s Instagram account.