Three other cases of crypto fraud were also announced by the DOJ, with potential losses exceeding $100 million. This afternoon, the Department of Justice announced criminal charges against the creator of Baller Ape Club NFT for orchestrating a ” rug pulling”.
These charges are in addition to three others related to cryptocurrency fraud. This is the second time federal prosecutors have pursued an NFT “rug pull” scheme. In this scheme, NFT project creators make false promises of community benefits and utility and then abandon the project in order to get investors’ money.
Le Anh Traun is a Vietnamese national and is facing one count each of conspiracy to wire fraud or conspiracy to launder international money.
Traun is alleged to have collected $2.6million from Baller Ape NFT purchasers, but then deleted the website of the organization and used the money to launder the money. According to the Justice Department, Traun converted the illegal gains into different cryptocurrency and transferred them across multiple blockchains in a process known as “chain-hopping.”
Traun could spend up to 40 years prison if convicted.
NFT “rug pulling” is a common occurrence in the highly-volume, decentralized world NFT trading. New collections are created daily by a variety of unknown creators. The NFT market was worth $25 billion last year. However, the Department of Justice did not prosecute any NFT fraud cases in 2021.
The federal government only indicated its willingness to pursue such cases in March, when it announced its first case against an NFT creator. This was for defrauding buyers . Today’s charges confirm that appetite.
“These cases are a reminder that con artists sometimes hide behind trendy buzzwords but, at the end of it all, they are just seeking to seize people’s money,” stated Tracy L. Wilkison, U.S. attorney for the Central District of California in a statement. “We will continue working with our law enforcement partners in order to educate and protect potential investor about traditional and trendy investments.”
The national enforcement action that was led by the DOJ, the Department of Homeland Security, and the FBI resulted in the Baller Ape case.
Other cases include an alleged Ponzi scheme to raise cryptocurrency and $21 million in fraudulent initial coin offerings; an elaborate scheme to sell crypto commodities to investors that promised 600% returns; and a scheme to lure investors to his Hollywood Hills homes with promises of 600% returns. He also used a team of armed security officers to create a false image and wealth.