Mutant Ape Planet creator Aurelien Michel is charged in $3M NFT scam

Aurelien Michel, 24, was arrested on Wednesday on federal charges

A French NFT developer has been arrested on US federal charges that he scammed buyers of his 'Mutant Ape Planet' digital collectibles out of nearly $3 million.

Aurelien Michel, 24, a French national who lives in Dubai, was apprehended on Wednesday night at John F. Kennedy International Airport in New York, officials said.

In a criminal complaint unsealed following his arrest, Michel is charged with perpetrating a 'rug pull' scam - a scheme in which an NFT developer sells digital collectibles with the promise of adding new features and rewards, but then takes the money and runs.

NFTs, short for non-fungible tokens, are unique digital collectibles that have exploded in popularity in recent years, with even former President Donald Trump recently launching an NFT collection.

The creator of the Mutant Ape Planet NFT collection has been charged with scamming buyers out of $2.9 million. Examples of the 'Mutant Ape' NTFs are seen above

However, the novelty of the space, and the lure of potential soaring returns, has been a magnet for fraudsters who use age-old schemes to scam gullible buyers.

Prosecutors say that Michel perpetrated such a scam, defrauding buyers of his 'Mutant Ape Planet' NFTs out of $2.9 million.

The Mutant Ape collection itself appears to be an imitation of several other, more popular NFT collections that launched last year, selling unique cartoon depictions of apes. 

According to the complaint, Michel launched his Mutant Ape collection in early 2022, selling the cartoon apes for the equivalent of about $430 apiece.

The website for the project promised that buyers would get a wide range of benefits as sales progressed, including raffles and rewards funded by the sale of the collection.

But prosecutors say that instead of continuing to develop the collection and offer purchasers the rewards he promised, Michel abandoned the project and made off with the proceeds for personal use - the so-called 'rug pull' scam.

Aurelien Michel, 24, a French national who lives in Dubai, was apprehended on Wednesday night at John F. Kennedy International Airport in New York (seen in a file photo)

'As alleged, the defendant used a traditional criminal scheme to defraud consumers eager to participate in a new digital asset market,' said Breon Peace, US Attorney for the Eastern District of New York, in a statement. 

'Protection from fraud and manipulation extends to all consumers and investors, including those participating in the fast-evolving market for NFTs and other crypto assets,' he added.

After he was confronted by Mutant Ape purchasers on social media, Michel appeared to admit to perpetrating 'rug pull' - but attempted to shift the blame the community of NFT purchasers for his actions.

'We never intended to rug but the community went way too toxic,' he said in the Mutant Ape Discord chat, according to the complaint.

Michel's first court appearance was held on Thursday before United States Magistrate Judge James R. Cho.

In a criminal complaint unsealed following his arrest, Michel is charged with perpetrating a 'rug pull' scam on Mutant Ape Planet buyers

Federal records show that he is being held in the Brooklyn Metropolitan Detention Center. It was unclear whether he had an attorney to speak on his behalf. 

NFTs use the blockchain technology behind cryptocurrency to record the ownership of digital items such as images, videos, collectibles and even land in virtual worlds. 

They first exploded in popularity in early 2021. A single NFT artwork by the digital artist Beeple fetched $69.3 million at Christie's, in the first sale by a major auction house of artwork with no physical form. 

The NFT market generated around $22.71 billion in volume in 2022 across the top 10 platforms and marketplaces, according to data from DappRadar.

This marked only a slight decline from the $24.16 billion in volume seen in 2021, at the height of the NFT buying frenzy.