Two individuals, including a senior airman and cyber analyst in the U.S. military, have been charged for money laundering in connection to an NFT “rug pull” scheme, a February 23 statement from U.S. Immigrations and Customs Enforcement (ICE) reveals.
Over $300,000 of Victims’ Funds Stolen
Devin Alan Rhoden (a.k.a Denny or Deviinz), 24, of Florida and Berman Jerry Nowlin Jr. (a.k.a Repulse or Zayous), 20, of Alabama were indicted for money laundering and conspiracy to commit wire fraud following an investigation by Homeland Security. According to the indictment, Rhoden and Nowlin “convinced hundreds of victims to invest tens of thousands in cryptocurrency in a non-fungible token collection named ‘Undead Tombstone.’” However, the duo failed to follow through on their victims’ investments, instead stealing and ultimately laundering the funds.Beginning in March 2022, Rhoden and Nowlin opened a number of social media accounts to promote “Undead Tombstone” to the masses. The value increased “significantly” in the weeks thereafter, with the duo launching collections titled “Undead Apes” and “Undead Lady Apes.”The following month, the co-conspirators took to social media to announce their collaboration “with a well-known and successful NFT project.” That same day, Roden and Nowlin “abandoned Undead Tombstone” before ultimately laundering and transferring the funds to cash.“In a matter of weeks, the three NFT collections resulted in Rhoden and Nowlin receiving more than $300,000 in cryptocurrency from hundreds of victim-investors all over the world,” the indictment continues.
A Classic “Rug Pull” Scheme In Action
The scheme, known as a “rug pull” amongst the crypto community, occurs when a founder or investor hypes up a product only to suddenly abandon it at its peak and disappear with the funds.Blockchain data firm Chainalysis alleges that over $2.8 billion was lost to “rug pull” incidents in 2022 alone.Similarly, Rhoden and Nowlin utilized a technique called “chain-hopping” to obfuscate customer investments, wherein funds are transferred between different cryptocurrencies in hopes of evading law enforcement.According to Elliptic, cross-chain-hopping reached a fever pitch in 2023 when the value of illicit crypto laundered through the technique read an estimated $7 billion.
Has Undead Apes Been Revived?
Coincidentally, on February 26th – three days after ICE’s statement – an NFT collection entitled “Undead Apes” was released on launchmynft.io by a user named AZEJGH…R57g.
PUBLIC FREE MINT IS LIVE
— Undead Apes ┃ FREE MINT (@Apes_undead) February 26, 2024
At the time of article publication, It is unclear whether the project is related to Rhoden and Nowlin.
If convicted, both Rhoden and Nowlin face a maximum penalty of five years in federal prison.
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