US Charges Three UK Nationals in $2.7 Million NFT Rug Pull Scam

The US Attorney’s Office for the Southern District of New York has announced charges against three UK nationals for their involvement in a 2021 NFT rug pull scam. The individuals, Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan, all aged 23, face serious allegations of wire fraud and money laundering, with each count carrying a potential maximum sentence of 20 years in prison.

The trio is accused of executing a scam centered around a digital art collection known as ‘Evolved Apes,’ which consisted of 10,000 NFTs. According to the indictment, the suspects engaged in a classic “rug pull” by advertising the project, collecting funds from buyers, and then abruptly abandoning the project, absconding with the funds—specifically, 798 Ethereum, which amounted to approximately $2.7 million at the time.

US Attorney Damian Williams emphasized the deceptive nature of the scheme, stating, “The defendants ran a scam to drive up the price of digital artwork through false promises about developing a video game. They allegedly took investor funds, never developed the game, and pocketed the proceeds.”

Williams further highlighted the gravity of making fraudulent claims, especially in emerging markets such as digital art: “Digital art may be new, but old rules still apply: Making false promises for money is illegal. As we allege, thousands of people believed these false promises and were tricked into buying these NFTs, including here in the Southern District of New York.”

Furthermore, it is alleged that the accused laundered the stolen funds through various cryptocurrency transactions, transferring the ill-gotten gains into their personal accounts.

This case echoes a broader issue within the digital asset space. Rug pulls and similar scams amounted to approximately $760 million, as per data from blockchain security firm Quantstamp. This case underlines the ongoing risks and challenges within the rapidly evolving NFT and cryptocurrency sectors.

The charges brought by the US Attorney’s Office serve as a stark reminder of the legal boundaries that apply to new digital enterprises, reaffirming that traditional legal principles still govern modern digital transactions. This case also acts as a warning to potential investors about the risks associated with digital assets, particularly in projects lacking transparency and accountability.