This afternoon, the Department of Justice said that the designer of the Baller Ape Club NFT line set up a “rug pull,” which is a slang term for a robbery.
This is the second time that federal prosecutors have gone after an NFT “rug-pull” scheme. In these schemes, NFT project creators sell NFTs under false pretenses of community benefits and utility, then abandon the project and run away with investors’ money. The charges were made public at the same time as those in three other cases of cryptocurrency fraud.
Le Anh Traun is a Vietnamese citizen who is accused of conspiring to do wire fraud and international money laundering.
Traun is accused of taking $2.6 million from people who bought Baller Ape NFTs and then quickly taking down the company’s website and putting the money in other accounts. The Justice Department says that he put the money he got illegally into several cryptocurrencies and moved them across different blockchains. This is called “chain-hopping.”
Traun could go to jail for up to 40 years if he is found guilty.
NFT “rug pulls” are all too common in the high-volume, decentralized world of NFT trading, where new collections come out every day from a lot of people you’ve never heard of. Last year, the NFT market brought in $25 billion by itself. But the Department of Justice didn’t take any NFT fraud cases to court in 2021.
The federal government didn’t show that it was ready to go after these cases until March of this year, when the DOJ announced its first-ever lawsuit against an NFT developer for scamming buyers (creators of the well-known “rug-pull” NFT collection Frosties). The charges from today show that people are still hungry.
In a statement, Tracy L. Wilkison, the U.S. Attorney for the Central District of California, said that these cases “serve as an important reminder that some scammers hide behind current jargon, but at the end of the day, all they want is people’s money.” We’ll keep working with the police to educate and protect potential investors about both traditional and new investments.
The DOJ, the Department of Homeland Security, the FBI, and the Department of Justice all worked together on a nationwide enforcement project that led to the Baller Ape case and the three other cases that were made public today.
Other cases brought to court today include an alleged cryptocurrency Ponzi scheme that raised almost $100 million, a fraudulent initial coin offering that scammed investors out of $21 million, and an elaborate crypto commodities scheme in which a man promised investors returns of 600 percent while courting them with meetings at Hollywood Hills homes he didn’t own and giving the impression of wealth and power by using a fake team of armed security guards.
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