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ARTICLE · 16 FEBRUARY 2023

Beware Of NFT Fraud

Ankura Consulting Group LLC
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Non-fungible tokens (NFTs) may have captured the imagination of the public but they are an increasingly risky purchase. Not only have NFT values plummeted in recent months, in common...

GlobalTechnology
Andrew Pimlott
Andrew Pimlott

Non-fungible tokens (NFTs) may have captured the imagination of the public but they are an increasingly risky purchase. Not only have NFT values plummeted in recent months, in common with the entire cryptoasset market, but there is a growing likelihood of buyers being defrauded. NFTs are also being used by money launderers, tax evaders, sanctions violators, and other miscreants.

A high-profile fraud came to light only last month when U.S. prosecutors in the Eastern District of New York charged Aurelien Michel, a 24-year-old French national resident in the United Arab Emirates (UAE), with defrauding purchasers of Mutant Ape Planet NFTs of more than $2.9m in cryptocurrency.

The scheme involved selling NFTs to buyers who were promised numerous benefits designed to increase demand for, and the value of, their newly acquired NFTs. But once they had bought them, they were "rug-pulled" – a cryptocurrency fraud by which the seller pulls out before the project is

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