A developer from Huntsville, Alabama, and his accomplice scammed hundreds of people by raising funds through crypto investments in NFT collections. They raised nearly $400,000 and then disappeared with the money. A court in Tampa, Florida, found them guilty of fraud and money laundering.
According to statements, the two young men attracted the attention of law enforcement by executing a so-called "rug pull" — abruptly shutting down a crypto project, leaving investors empty-handed. After launching two successful NFT projects and garnering investor interest, the creators of the collections titled "UndeadApes" and "Undead Lady Apes" raised substantial funds only to announce a new project and soon vanish with the money.
The creators effectively promoted their projects on social media, offering tokens at an initial price of around $5 and promising future growth. On the secondary market, the value of these NFTs surged to $360, fueling investor interest. In April 2022, the scammers announced a new collection — "Undead Tombstone" — and quickly raised about $135,000 before abruptly shutting down the project and deleting all their social media accounts. As a result of a series of manipulations, the fraudsters managed to obtain a total of around $400,000.
Following the extensive scam, investigators tracked down the criminals. The operation to trace the funds revealed that the scammers moved money from one blockchain to another. To complicate the search process, the criminals used Tornado Cash, a service that anonymizes transactions by transferring funds from the Solana network to Ethereum. However, despite these tricks, they were eventually uncovered and arrested.
One of the fraudsters has pleaded guilty and is awaiting sentencing on November 20, 2024, while the other faces up to five years in prison.
It remains unclear whether investors will be able to recover their funds.
