Three United Kingdom Nationals Charged In Connection With “Evolved Apes” NFT Scam

Damian Williams, the United States Attorney for the Southern District of New York, and James Smith, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging MOHAMED-AMIN ATCHA, MOHAMED RILAZ WALEEDH, and DAOOD HASSAN, all United Kingdom nationals, with conspiracy to commit wire fraud and money laundering.  The charges arise from the defendants’ scheme to defraud victims into purchasing digital artwork known as the “Evolved Apes” collection of non-fungible tokens (“NFTs”).  The case has been assigned to U.S. District Judge J. Paul Oetken.

U.S. Attorney Damian Williams said: “As alleged, 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.  As we allege, thousands of people believed these false promises and were tricked into buying these NFTs, including here in the Southern District of New York.  NFT fraud is no game, and those responsible will be held accountable.”

FBI Assistant Director in Charge James Smith said: “These three defendants allegedly were part of a scheme to pump up the price of NFTs with lies to the public about developing a related videogame, and to surreptitiously transfer the proceeds of the fraud to their personal accounts.  Ghosting customers without fulfilling a promise not only reflects poor business integrity, it also violates the implicit trust buyers place in sellers when purchasing a product, no matter if that product is in a store or stored on a blockchain.  The FBI remains committed to pursuing those who perpetrate fraudulent schemes out of a selfish desire for a quick profit.”

According to the allegations in the Indictment:[1]

In the fall of 2021, ATCHA, WALEEDH, and HASSAN executed a type of scam commonly known as a “rug pull,” where developers advertise a digital project, collect funds from purchasers, then abandon the project and keep the funds.  ATCHA, WALEEDH, and HASSAN allegedly created and promoted an NFT project called “Evolved Apes” that involved the marketing of digital images of cartoon apes.  The following is a graphic typical of the images that became Evolved Apes NFTs:

The creators and promoters of the Evolved Apes project publicly promised to use funds raised from selling the NFTs to develop a videogame based on the NFTs, which they claimed would increase the NFTs’ value.  But after selling the NFTs and collecting large sums from purchasers, including in the Southern District of New York, they quickly shut down the Project’s website and kept the funds without developing the promised videogame.  ATCHA, WALEEDH and HASSAN then laundered the misappropriated funds through multiple cryptocurrency transactions to their own personal accounts to conceal their ill-gotten gains.

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ATCHA, 23, WALEEDH, 23, and HASSAN, 23, all United Kingdom nationals, are charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the FBI.

The case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Samuel L. Raymond and Josiah Pertz are in charge of the prosecution.

The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.