Frenchman arrested in New York accused of NFT fraud

Published January 12, 2023, 3:58 pm

Luxury hotels, Ferraris and the World Championship final in Qatar, Aurélien Michel paved the way and did not fail to record everything on Instagram. Too good to be true. This 24-year-old Breton – son of former Guingamp footballer Claude Michel – was arrested on January 4 at John F. Kennedy airport in New York. He is accused in US courts of setting up a $2.9 million NFT scam in February 2022. After an immediate federal court appearance in Brooklyn, he was held in custody.

While the euphoria over “non-fungible” images on the blockchain is still in full swing in early 2022, the French expat in Dubai is launching, on February 4, a collection of 9,999 NFTs with the evocative name of “Mutant Ape Planet”, a reference confused to the better known “Mutant Ape Yacht Club” of the study Yuga Labs, then sold for several thousand dollars each.

Cryptocurrencies mixed on Tornado Cash

To get investors to spend 0.15 ether on his images of mutant apes, or nearly $2,000 at the time, Aurélien Michel and his cronies promised “perks”: derivative products, creation of an NFT-associated token to invest in the decentralized finance and potentially earn money, or the arrival of a metaverse to give even more value to tokens. They are also investing $500,000 in marketing to increase demand for these NFTs and their value.

The token sale is a great success. All of the NFTs sold out within days, grossing a total of $2.9 million. The collapse of the cryptocurrency market will come only four months later. Instead of investing the proceeds of the sale as he had promised to his social network community, Aurélien Michel diverts the funds to Tornado Cash (a cryptocurrency mixer used to erase tracks) for, finally, transfer to his Binance wallet.

An alleged “knockout”

On June 4, in a Discord room, an anonymous team member admits that in reality the “Mutant Ape Planet” NFTs are a “rug pull”, a phantom project destined simply to start with the cash register. He assures that he didn’t intend to cheat, but that the community has become “toxic” and that in short, the team prefers to stop there. Aurélien Michel then ignores that he has already been under investigation, since April, by the United States Department of Homeland Security.

As dark web agent Kayla Blades explains in her investigative report, the young Frenchman was confused when he applied for a US visa with the same ID, contact details and IP address as those used to open his Binance account, when he responded to the “KYC” procedure for identifying customers. His trial date has not yet been set. Aurélien Michel faces up to 20 years in prison.

2022, the year of the carpet throw

In the cryptocurrency scam breviary, rug pulls boomed in 2022. A Solidus Labs report identified 117,629 such “rug pulls” last year, up from 83,368 in 2021 and 1,548 in 2020. These montages of they are usually based on deceptive marketing, fake roadmaps, fake partnerships and even bots that simulate trading activities. Even the goal is always the same: not to develop anything and start with the money of gullible investors.

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