NY prosecutors accuse Evolved Apes NFT of scamming charges.

The United States Attorney’s Office for the Southern District of New York has charged three individuals — Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan — with wire fraud and money laundering in connection with the 2021 “Evolved Apes” NFT rug pull scam.

Evolved Apes was a collection of 10,000 unique NFTs that promised buyers a video game, which never materialized. A week after launch, the anonymous developer known as “Evil Ape” disappeared with 798 Ethereum (ETH) worth $2.7 million at the time. U.S. Attorney Damian Williams said:

The defendants ran a scam to drive up the price of digital artwork through false promises about developing a videogame. […] They allegedly took investor funds, never developed the game, and pocketed the proceeds. Digital art may be new, but old rules still apply: making false promises for money is illegal.

In the crypto world, this type of scam is known as a “rug pull” — developers raise funds, in most cases through token or NFT sales. After accumulating enough assets, they abruptly shut down the project and vanish with the money.

‘Rugpull’ scams in crypto

According to De.Fi’s Rekt database, over $79.7 billion has been lost to crypto bad actors since 2011. The largest rugpull listed is South African digital assets investment fund Africrypt, which disappeared with 69,000 Bitcoin (BTC) worth nearly $4.8 billion in 2021.

The report follows a cryptocurrency trader recently losing $69 million in a sophisticated “address poisoning” scam. In this kind of scam, bad actors create fake accounts mimicking the victim’s online crypto address and send small amounts, hoping the victim accidentally sends money to the fake address later.

Cryptocurrency-related scams, including “pig butchering” scams, are becoming increasingly prevalent and costly for investors. At the end of last year, United States authorities were able to recover about $500,000 worth of assets lost to pig butchering scams.

In mid-March, Massachusetts prosecutors also took some steps to return $2.3 million worth of digital assets seized from fraudsters to pig-butchering scam victims.

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