Air Force Analyst Accused of NFT “Rug Pull” Scam
Prosecutors in Florida have accused an active duty United States Air Force cyber analyst of conducting a “rug pull” – an NFT-fueled scam where creators of NFTs fraudulently hype up their value and then abscond with the proceeds before the price crashes.
Devin Alan Rhoden, who had top-secret clearance while serving as an airman, according to what appears to be his LinkedIn, was also allegedly involved in creating and promoting “UndeadApes NFTs,” a riff on the then-popular Bored Apes Yacht Club images in 2022, according to a 19-page criminal complaint.
The United States Air Force did not immediately respond to a request for comment from Forbes.
Allegations Link Airman to “UndeadApes NFTs” Scheme
In preparation to release a related set of NFTs called “Undead Tombstones,” Rhoden and another organizer claimed to have made a deal with a more successful group, known as the Stoned Ape Crew. However, federal authorities allege that this arrangement was totally bogus, and the price of the new NFT collection, along with two previous ones, quickly collapsed.
Court records show Rhoden was arrested earlier this week for the alleged scam. He was charged with one count of money laundering conspiracy and one count of making a false statement to a federal agency. In an email to Forbes, his federal public defender, Adam Allen, declined to comment. On Thursday, Rhoden was released on a $20,000 bond.
Arrested Airman Claims $250K in Illegal NFT Profits
According to Rhoden’s own chat logs revealed in the criminal complaint, the Florida resident claimed that he made approximately $250,000 from the illegal scheme. He also allegedly bragged that he used the proceeds to buy a house, remodel it, buy his “dream car outright,” “have over 6 months of expenses in savings,” and “still have money leftover.””[G]ood shit on us making a fuck ton of money,” Rhoden further wrote in one of the Discord chat logs that were obtained by investigators.
There have been billions of dollars in collective losses in similar NFT-based rug pulls, according to blockchain analysis firm Chainalysis.
Investigator Subpoenas Airman’s Incriminating Searches
Investigators also subpoenaed Rhoden’s search history, which included what prosecutors called “incriminating searches.”
These included phrases that Rhoden allegedly searched, including “does Coinbase have KYC,” referring to the standard practice of “know your customer” implemented by mainstream financial institutions.
Rhoden also queried for “what happens if a utility NFT rugs” and later that same day, also searched for the federal criminal code for wire fraud.
No Court Dates Set Yet in Airman’s NFT Fraud Case
No further court dates have been scheduled for now. The case is still ongoing, and Rhoden will have to face the charges brought against him in court. The outcome of this case will be closely watched by the NFT community and law enforcement agencies as they grapple with the growing number of fraudulent activities surrounding the lucrative NFT market.
As the popularity of NFTs continues to soar, it is crucial for authorities to crack down on scams and fraudulent schemes, ensuring the integrity and trustworthiness of the market. The case of Devin Alan Rhoden will serve as a reminder of the risks involved and the consequences that await those who attempt to take advantage of unsuspecting NFT buyers.
Analyst comment
This news can be evaluated as negative. The market is likely to experience increased scrutiny and regulation as authorities crack down on fraudulent activities in the NFT market. This incident may lead to a decline in trust among NFT buyers and a more cautious approach towards investing in NFTs.
