The Department of Justice (DOJ) has announced that it is taking the creator of an NFT project to court after filing charges against him. In the details published, the CEO of the Mutant Ape project, Aurelien Michael, was apprehended at an airport two nights ago. According to the justice department, the project was eventually pulled, leading to investors and users losing their funds. The report mentioned that the users lost more than $2.5 million in the rug pull.
The CEO rug pulled almost $3 million
The CEO of the project is originally a French citizen but lives actively in the United Arab Emirates. According to the DOJ, Michael will be charged with an offense bordering on fraud using wire transfers. This will be the third time that any regulatory body has gone after the founders of NFT on rug pull claims.
Rug pull is ideally a phenomenon that describes a situation where founders of an NFT project withdraw and use funds sent by investors and users for personal gains. This way, the directors of the projects have made false promises about the project and reneged on their initial agreement during the period where they are taking the funds from users in the ecosystem.
Michael set to argue his case in court
The DOJ said the CEO initially made many claims to the users before withdrawing their funds valued at around $2.9 million and absconding with them. Some promised items were merchandise branded in the company name, among other things. In his apprehension, the justice department connived with other regulators to ensure its success. The regulators also said that they had obtained evidence that would show the court that the rug pull was pre-planned days before it happened. The statement said that the project was not supposed to end in a rug pull, but the toxicity in the community affected the decision.
An executive of the DOJ noted that the CEO would no longer be able to trade blames as he looks set to argue his case in court very soon. Some other rug pool projects that have been nabbed include Baller Ape and Frostie NFT, which saw users lose about $2 million and $1 million, respectively. Rug pulls have continued to be a nail-biting issue with projects across the crypto market. Although some are anonymous, the exact figure for last year was around $25 billion. Although the incident of rug pulls has happened frequently, this is only the third one in history that regulators have intercepted.