For American justice, the case has been heard. The virtual images of the Mutant Ape Planet series that plagiarize one of the most famous collections of NFTs, these non-fungible tokens that allow you to claim ownership of a computer file, look like another scam on the way. This led to the arrest in New York of Aurélien Michel, this Breton suspected of being the main administrator of the project.
Two million investors victims
This type of fraud has become one of the plagues of the crypto-asset community. During a “carpet-pull” in community jargon, “carpet pulling” in French, it is about releasing a crypto asset to resell its shares at a higher level before its value drops. According to company Solidus Labsa company in tracking flows on blockchains
, the number of victims is impressive. In two years, two million investors have lost funds in nearly 200,000 dubious projects.
“The authors of these scams make their project shine, suggesting that there will be significant returns on investment, summarizes Éric Ruffié, a specialist in Internet investigations. They take advantage of the loyalty of their victims and get the money as fast as they can.” Example with the Squid Game crypto scam, which usurped the name of the famous Netflix series.
The offer was attractive on paper. Token holders had to earn other cryptocurrencies through the games. But there was an eel under the rock. The creators of the crypto-asset were not who they claimed to be, notably claiming false support from well-known figures.
In the fall of 2021, the price of this crypto-asset rises to new heights. The developers then sell their shares, an estimated sum of around three million dollars. Once it’s gone, the souffle bursts and the price of the crypto crashes, causing investors to lose their stake.
If these scams are thriving, victims are not completely helpless. Because some cases lead to prosecution. “The authorities are now sanctioning situations that have not been prosecuted so far,” notes specialist lawyer Romain Chilly.
A judicial response favored by a better recognition by investigative services of the universe of crypto-assets. But even thanks to the “crypto winter”, this sudden decline in a market that had been structurally growing until now, included scams, highlighting the most fake projects.
“Crypto has been widely criticized for being a tool that facilitates money laundering or illegal transactions,” adds Romain Chilly. But we see at the same time that it is a formidable tool for identifying the perpetrators of criminal offences. It is thanks to the analysis of transactions on the blockchain that we manage to identify the suspects”.
Surveys just a click away
Because blockchain is anything but synonymous with anonymity. Holders of a crypto wallet are identified by a pseudonym. And it is possible to track their transactions in some kind of public ledger. This allows even anonymous commoners, like crypto star investigator ZachXBT, to contribute.
This netizen’s investigation followed by more than 346,000 people on Twitter, confirmed by French police, resulted in the indictment of five suspects this fall in Paris. This time not a case of fraud, but a simple theft of NFTs from the “Board Ape” collection. Estimated anyway, at the time, about $2.5 million…
Are you a fan or curious about NFT and looking to invest while avoiding scams? “Look at the crypto portfolio of the project manager: if the outflows are greater than the inflows, this can be a warning signal”, notes Éric Ruffié for example. And follow some common sense advice. Beware of excessive plans and unrealistic promises, and check that the image associated with the NFT did not exist before the token was created. And ask yourself if relations with investors are located, for example, in a chat room on the messaging application Discord: this is not really serious.