Mohamed-Amin Atcha, Mohamed Rilaz Waleedh, and Daood Hassan allegedly increased the prices for the NFTs with empty promises to develop a video game. Prosecutors said that thousands of people were tricked into buying the NFTs.
“They allegedly took investor funds, never developed the game, and pocketed the proceeds,” U.S. Attorney Damian Williams said in a statement. “Digital art may be new, but old rules still apply: making false promises for money is illegal.”
In an unsealed indictment, prosecutors claimed that the “rug pull” scam occurred between March and September 2021. The three men allegedly promoted the creation of a fighting game on a now-deleted website.
“The website expressly tied gameplay to the value of the NFTs,” prosecutors wrote in the indictment, stating that the three individuals guaranteed daily prize tournaments where the value of specific character NFTs would rise based on their number of victories.
The alleged scammers made at least $2 million from their scheme just one day after the first sales of the NFTs on September 24, 2021. The website was shut down on October 5, 2021. The three men face up to 20 years in jail on each charge if convicted.
