Mutant Ape Planet NFT developer charged with fraud for selling ‘worthless asset’

On January 5, the Department of Justice for the Eastern District of New York unsealed a criminal complaint against Mutant Ape Planet developer Aurelien Michel, accusing him of scamming investors.

Michel was arrested on January 4 at JFK Airport and will appear before a magistrate within 24 hours.

This is the first time such charges have been filed in the Eastern District of New York against an NFT project.

Furthermore, the complaint stated that “none of the promised benefits were supplied” to holders of Mutant Ape Planet NFTs. Instead, Michel allegedly failed to meet the project's timeline and diverted monies to his personal accounts. The complaint further described NFTs that did not provide the “promised benefits” as a “worthless asset.”

Breon Peace, United States Attorney for the Eastern District of New York, stated,

“As alleged, the defendant engaged in a classic criminal plan to deceive people anxious to participate in a new digital asset market. All consumers and investors, especially those involved in the rapidly evolving market for NFTs and other crypto assets, are protected from fraud and manipulation.”

Miche “falsely promised several prizes and benefits aimed to build demand for, and the value of, their newly acquired NFTs,” according to the allegations. Following the alleged “rug pull,” Michel attempted to flee with $3 million in investor monies.

“Exclusive possibilities for additional investments, giveaways, merchandise, and other perks” were available on Mutant Ape Planet. The NFT was distributed to investors, but no additional benefits were provided. Failure to deliver on the benefits outlined in the roadmap has thus been designated as a criminal offense in New York.

Michel is believed to have said in a Discord chat, “we never intended to rug, but the community became far too toxic.” Michel, on the other hand, used the alias “James” to disguise his own identity.

The project will be coined for 0.15ETH in February 2022. The smart contract, on the other hand, contained a “release” function that allowed Michel to transfer funds into personal wallets. He was recognized since the wallet was on an exchange account for which he had KYC'd.

While a $3 million NFT rug pull may be a regrettable norm in the crypto sector, the Department of Justice prosecuting a project for failing to deliver on extra advantages may be a watershed moment for NFT regulation. Furthermore, if the case is successful, it will create a precedent for future NFT ventures.

In terms of legislation, much of the NFT space is uncharted territory. With clearly established norms from regulating organizations, the courts will provide clarification.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!