The United States Department of Justice has released a statement detailing the reasons for arresting Aurelien Michel, creator of a popular NFT collection. Aurelien Michel is a 24-year French National who resides in Dubai, and according to the DOJ, he carried out a rug-pull scam that saw over $3 million of investor money cave into his pocket.
Rug-pull in Crypto
A rug pull in crypto describes a situation where the creators of a project suddenly and unexpectedly shut down the project and disappear with the investors’ funds. The project’s creators create an illusion of legitimacy to entice people to invest their money.
However, the creators abruptly shut down the project and took the funds for themselves without warning. A rug can devastate investors and users who may have put a lot of time, money, and effort into the project and cause significant financial losses.
Aurelien Michel and the Complaint
According to the documents released by the DOJ, Micheal’s collection of mutant apes debuted in early 2022, with the project promising buyers certain post-purchase benefits such as rewards from sales revenue, raffles, and more.
Last year during the launch, each piece in the collection was worth around $460, given the high price of ETH. Then, according to Thomas Fattorusso, the agent in charge, Micheal stopped all communications with his NFT community and ceased all further development work on the project.
Micheal took off with over $3 million, leaving many investors stranded and heartbroken. However, for many NFT enthusiasts on the internet, the collection looks like a derivative of other NFT projects in the wider-ape NFT community.
Micheal admitted to the scam in some way but quickly changed the tone to blame his community. According to the complaint, Micheal, on a Discord chat, said he never intended to pull out. However, according to him, the community grew toxic and forced the decision.
The prosecutors arraigned Micheal on Thursday immediately after his arrest. The CEO is currently at the Brooklyn Detention Center waiting for his next day in court. Thomas Fattorusso believes that the CEO can no longer hide from his actions and that he will get what is coming to him following his arrest.
NFT Fraud
Non-fungible tokens (NFTs) are digital assets stored on a blockchain and used to represent ownership of unique items such as artwork, collectibles, and virtual real estate. While NFTs offer many benefits, including the ability to easily and securely transfer ownership of digital assets, they also present potential risks, including the possibility of fraud.
For example, rug pulls can be especially devastating for investors and users who may have put a lot of time, money, and effort into the project and can cause significant financial losses. For investors and potential investors to protect themselves against these risks, individuals need to be cautious when buying NFTs.
Do your due diligence before making purchasing any new NFT project! You can do this by researching the seller’s reputation, checking for any red flags or warning signs, and being aware of the potential risks of buying NFTs. It is also important for individuals to be aware of the possibility of fraud in the NFT market and to be cautious when buying NFTs from unfamiliar sources or projects.
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