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For the first time in U.S. history, the architect of a so-called NFT “rug pull” scheme has been convicted of a federal crime—and could soon end up behind bars.
Aurelien Michel, the 25-year old founder of the ill-fated Mutant Ape Planet NFT collection, pled guilty Tuesday at a federal courthouse in Brooklyn to wire fraud charges. He was accused of conspiring to commit wire fraud in the process of defrauding Mutant Ape NFT holders of almost $3 million.
Michel now faces up to five years in federal prison, and has agreed to pay $1.4 million in forfeiture, according to the Department of Justice.
When Michel was arrested at New York’s JFK Airport in January, his NFT project became the third ever to be accused by federal authorities of executing a rug pull—a scheme in which an NFT project’s creators sell NFTs on false promises of community benefits, utility, and financial perks, only to abandon the project and make away with holders’ funds.
According to federal prosecutors, Michel—a French citizen who resided, until his arrest, in the United Arab Emirates (UAE)—explicitly told Mutant Ape Planet holders that he had, in fact, rug pulled them.
“We never intended to rug, but the community went way too toxic,” Michel reportedly told Mutant Ape purchasers, after failing to follow through on giveaways, merchandise collections, and tokens with staking features that he had previously guaranteed as perks of the NFT collection.
“With today’s guilty plea, Michel has admitted that he conspired with others to defraud consumers eager to participate in a new digital asset market,” U.S. Attorney Breon Peace said in a statement. “Our office is acutely aware that criminal actors are taking advantage of the constant pace of innovation in the digital asset space and the investing public’s desire to become involved in cryptocurrency to perpetrate large-scale frauds.”
Days after Michel’s arrest, the pseudonymous on-chain analyst ZachXBT produced evidence connecting the freshly convicted entrepreneur to two other prominent NFT rug pulls: Fashion Ape NFT, which collected $1.1 million from holders before going dark, and Crazy Camels, which made $1.6 million before doing the same. Michel has not been charged in relation to either project.
The two NFT rug pull cases charged by federal prosecutors prior to Michel’s arrest—the first, against the creators of the Frosties NFT project, the second against the founder of the Baller Ape Club NFT collection—appear to have not yet been resolved. Decrypt reached out to the Department of Justice regarding both cases but did not immediately receive a response.
Federal authorities arrested the two 20-year old founders of Frosties in March of last year, and the creator of Baller Ape Club last June. The projects are alleged to have defrauded investors of $1.1 million and $2.6 million, respectively.
Edited by Ryan Ozawa.