Some hours ago, the United States Department of Justice made public allegations against the designer of the Baller Ape Club NFT line for organizing a purported "rug pull."
This is the second time that federal prosecutors have pursued an NFT "rug-pull" scheme, in which NFT project creators sell NFTs under false pretenses of community benefits and utility, only to abandon the project and escape with investors' money. The charges were announced along with those in three other cryptocurrency fraud cases.
Vietnamese national Le Anh Traun is accused of conspiracy to commit wire fraud and international money laundering.
Baller Ape NFT purchasers accuse Traun of stealing $2.6 million before deleting the company's website and laundering the money. He transferred the illegally obtained gains into several crypto assets and moved them across various blockchains, a process known as "chain-hopping," according to the Justice Department. Traun may spend as much as four decades in jail if found guilty.
In the high-volume, decentralized realm of NFT trading, where new collections emerge every day from a bevy of unheard-of producers, NFT "rug pulls" are all too prevalent in 2021 alone, the NFT market generated $25 billion in revenue but in 2021, the Department of Justice didn't bring any NFT fraud cases to trial.
The federal government didn't indicate its readiness to prosecute such prosecutions until March of this year, when the DOJ announced its first-ever case against an NFT developer for scamming purchasers (creators of the well-known "rug-pull" NFT collection Frosties). The charges from today confirm that appetite.
U.S. Attorney Tracy L. Wilkison for the Central District of California stated in a statement that these instances "provide as an important reminder that some con artists hide behind current jargon, but at the end of the day they are just trying to separate people from their money."
"We will continue to work with our law enforcement partners to inform and protect prospective investors about both conventional and cutting-edge investments."
The DOJ, along with the Department of Homeland Security, the FBI, and the Department of Justice jointly coordinated a nationwide enforcement initiative that resulted in the three other cases that were revealed today and the Baller Ape case.
Other cases brought to court today include an alleged crypto Ponzi scheme that raised almost $100 million, a fraudulent initial coin offering those defrauded investors 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 did not own and creating a false impression of wealth and power by using a fake team of armed security guards.