A French scammer has pleaded guilty in Brooklyn Federal Court to fleecing crypto investors who bought “Mutant Ape Planet” NFTs out of nearly $3 million.
Aurelien Michel, 25, admitted he performed a “rug pull” on people he sold the fad digital collectible to, falsely promising the buyers benefits like merchandising, raffles, exclusive access to other cryptocurrency assets and support from a $500,000 marketing fund.
Michel founded an NFT project called “Mutant Ape Planet” in early 2022 selling digitally unique images of cartoon ape artwork to investors.
On Tuesday, he admitted that he and his conspirators pulled their profits out of the Mutant Ape project without delivering any of the benefits promised, and took the money for himself. All the while, he and his accomplices kept up a web site and took to social media claiming the NFT project was “alive and well,” he admitted.
In a chat on the social media platform Discord, Michel admitted to investors he’d defrauded them, according to a criminal complaint, writing, “we never intended to rug [pull] but the community went way too toxic. I recognize that our behavior led to this.”
Michel could face 37 to 46 months behind bars when he’s sentenced on May 24.
During his allocution, Magistrate Judge Vera Scanlon asked Michel to describe the specific benefits he defrauded his investors out of, in an attempt to better understand the labyrinthine nature of NFTs.
“I don’t understand the fraud. This might be my not understanding the market very well,” she said.
NFTs, short for non-fungible tokens, blew up in popularity in 2021 among cryptocurrency investors. Typically, they’re sold as images or pieces of art, linked to a unique authentication “token” showing proof of ownership that’s stored on a shared public exchange called the blockchain.
At the height of NFTs’ popularity, one piece of art sold for $69 million, and several celebrities, including Madonna and Paris Hilton have gotten in on the trend.
But critics have described NFTs as a Ponzi scheme dressed up like a fad, and in October, a report from the “crypto gambling” analysis site dappGambl.com suggested that 95% of all NFTS are now worth nothing.