Newsletter #184: Justice Delivered
Rug pullers face up to five years in federal prison
This week’s featured collector is Jkellz
JKellz is a Solana NFT collector with an interest in pfps. Browse the collection at lazy.com/jkellz
The results of last week’s poll: Do you own any Soulbound NFTs?
This poll reveals that half of the respondents own at least one Soulbound NFT, indicating a notable interest or familiarity with this non-transferable digital asset type. Meanwhile, 38% of participants don’t own any Soulbound NFTs, and 13% are unsure if they possess any. These results suggest a split awareness and adoption level of Soulbound NFTs, highlighting potential areas for further education on what they are and how they differ from other NFTs.
Justice Delivered: NFT Rug Pullers Face 5 Years Behind Bars
Justice has been served following a $400,000 "rug pull" involving three NFT collections on the Solana blockchain: “Undead Apes,” “Undead Lady Apes,” and “Undead Tombstone.” The developers behind the projects, 21-year-old Berman Jerry Nowlin Jr. and 25-year-old Devin Alan Rhoden, allegedly lured hundreds of investors with low initial prices, false claims of future partnerships, and promises of capital reinvestment to enhance NFT utility. The collections began with $5 NFTs but skyrocketed in value, with the “Undead Apes” collection peaking at $360. In a textbook "rug pull," the developers abandoned the projects, deleted social media accounts, and cut all communication channels with investors, leaving collectors with worthless assets.
Legal proceedings revealed the extent of the scheme and the methods used to obscure the flow of funds. According to the U.S. Department of Justice, the developers used crypto mixer Tornado Cash and engaged in “chain-hopping” across different blockchains to disguise transactions. These tactics, meant to obscure the trail of stolen funds, eventually converted the ill-gotten cryptocurrency into U.S. dollars that Nowlin deposited into his personal bank account. Nowlin and Rhoden face up to five years in federal prison on charges of conspiracy to commit wire fraud and money laundering, with sentencing dates scheduled for early 2025.
For NFT collectors, this case serves as a stark warning about the risks associated with unvetted NFT projects and the evolving nature of digital asset fraud. To protect yourself as an NFT collector, it’s crucial to research project teams and verify their legitimacy. Look for transparency in team identities, past projects, and community engagement. Reviewing the project's roadmap and utility promises can help gauge authenticity, and overly optimistic claims should be met with skepticism. By taking these steps, collectors can reduce exposure to potential fraud. Stay safe!
Read more about the case at Decrypt.
How do you feel about the recent sentencing of NFT developers involved in a $400,000 "rug pull"?
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