NFT Marketplace Magic Eden Swamped with Fake Art and NFT Developer Charged in International Fraud Scheme

In March, Magic Eden raised $27 million in funding, followed by an additional $130 million at a valuation of $1.6 billion just three months later.

The startup's investors include Sequoia Capital and Electric Capital. Alameda Research, a digital asset trading firm co-founded by Sam Bankman-Fried, was also a previous investor, but is now defunct.

NFT Developer Charged in Multi-Million Dollar Fraud Scheme

This not the only incident that the crypto community has encountered this week. In fact, a criminal complaint was unsealed today in federal court in Brooklyn charging Aurelien Michel, a French national residing in the United Arab Emirates (UAE), with defrauding purchasers of “Mutant Ape Planet” NFTs, a type of digital asset, of more than $2.9 million in cryptocurrency. 

The defendant was arrested on the 4th of January at John F. Kennedy International Airport.  His initial appearance is scheduled for this afternoon before United States Magistrate Judge James R. Cho. 

As part of the scheme, NFTs were marketed to purchasers, who were falsely promised numerous rewards and benefits designed to increase demand for, and the value of, their newly acquired NFTs.  After selling out of the NFTs, the purchasers were “rug pulled” – a cryptocurrency scam in which a developer attracts investors, but pulls out before the project is complete, leaving buyers with a worthless asset – as none of the promised benefits were provided. Instead, millions worth of the NFT purchasers’ cryptocurrency was diverted for Michel’s personal benefit. 

In addition to that, and as alleged, in a social media chat with current and prospective purchasers, Michel admitted to the fraudulent “rug pull,” but blamed the community of NFT purchasers for his actions, stating, “We never intended to rug but the community went way too toxic.”

The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant United States Attorneys Drew Rolle and Dylan Stern of the Office’s Business and Securities Fraud Section with assistance from Paralegal Specialist William Daniels.