- Founder of a knock-off Mutant Ape NFT collection, Aurelien Michel, pleads guilty to wire fraud conspiracy, confessing to a $3 million scam.
- Arrest and Mastermind: French national Michel was arrested in January for orchestrating the fraudulent project, targeting investors.
- False Promises: Michel falsely claimed buyers of fake NFTs would receive special rewards and benefits, manipulating demand.
The founder of a knock-off Mutant Ape NFT collection has pleaded guilty to conspiracy to commit wire fraud, admitting to scamming investors out of $3 million. French national Aurelien Michel was arrested for masterminding the fraudulent project in early January.
According to the U.S. Attorney’s Office, Michel peddled the fake, non-fungible tokens by falsely promising buyers special rewards and benefits that would boost demand. However, prosecutors say Michel never intended to deliver on these claims, instead siphoning proceeds for personal gain.
“While Michel purported to sell dream NFTs backed with rewards and benefits, he defrauded investors, turning their dream into a nightmare of deception and losses,” said a special agent involved with the case.
The Mutant Ape Planet collection specifically mimicked the highly popular Mutant Ape Yacht Club NFTs created by Yuga Labs. After minting nearly 7,000 tokens on Ethereum, sales initially surged before eventually collapsing to zero as the rug pull unfolded.
Michel acknowledged the rug pull
In January, Michel acknowledged in a social media conversation that he executed a rug pull, challenging assertions that owners would receive significant benefits. He is currently confronting a potential sentence of up to 5 years in prison and has committed to paying $1.4 million in restitution.
The high-profile fraud case underscores the risks involved with speculative digital assets like NFTs. Without proper regulation, investors have little recourse when promises of utility fail to materialize.
Michel sought to capitalize on the hype surrounding blue-chip NFT brands by duping buyers into believing his knock-offs carried similar value. His admission of guilt serves as a warning to conduct due diligence before purchasing purely speculative blockchain-based assets.
As the DOJ cracks down on clear fraud, increased oversight is still needed to protect consumers from overzealous marketing and outright deception. The barriers to creating valueless NFTs remain low, allowing scams to proliferate amid frenzied demand.
Michel’s conviction makes it clear that authorities are ready to prosecute egregious cryptocons. But preventing such schemes before they fleece unsuspecting investors should be the ultimate goal.