NFT Scam Nets $3 Million: UK Trio Charged

The U.S. Department of Justice (DOJ) has announced charges against three UK nationals for their alleged involvement in a $3 million scam centered around the “Evolved Apes” NFT collection. Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan face accusations of wire fraud and money laundering in a classic pump-and-dump operation.

According to the DOJ, the scheme unfolded in 2021 with the trio promoting the Evolved Apes NFTs as part of a unique collection of 10,000 Ethereum-based tokens, which were also integral to an upcoming online battle royale game. However, the game was never developed, and the defendants are accused of making off with 798 ETH, valued at approximately $2.7 million at the time.

U.S. Attorney for the Southern District of New York, Damian Williams, emphasized the deceit involved in the operation. “As alleged, the defendants ran a scam to drive up the price of digital artwork through false promises about developing a video game,” Williams stated. He highlighted that the funds collected from investors were never used as promised but were instead pocketed by the accused.

The promotional efforts for Evolved Apes included the engagement of an unnamed social media influencer, adding to the hype and credibility of the project. This tactic is part of what the DOJ describes as aggressive marketing strategies employed by Atcha and Waleedh.

A pump-and-dump scheme traditionally involves enticing investors to buy into a project based on misleading information, only for the fraudsters to sell their shares and vanish, leaving investors with worthless assets. This type of fraud has been particularly rampant in the cryptocurrency and NFT space, given its relatively unregulated environment.

Further details from the case reveal that Waleedh, claiming to be the lead marketing manager, accessed frozen funds from a cryptocurrency exchange under false pretenses, subsequently transferring them to an address controlled by Hassan.

Highlighting the broader implications of such schemes, Williams added, “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.”

If found guilty, the accused could face up to 20 years in federal prison. This case adds to a growing list of fraudulent activities in the crypto space, including recent high-profile rug pulls that continue to challenge the integrity of the digital asset market.

The charges against the trio serve as a stark reminder of the ongoing risks and the need for vigilance in the digital asset space. The evolving landscape of cryptocurrency and NFTs continues to attract both innovative projects and fraudulent schemes, underscoring the critical need for regulatory clarity and investor education.