Five people were charged in France on Wednesday on suspicion of fraudulently acquiring $2.5 million in valuable NFTs.
Five people were charged in France on Wednesday on suspicion of fraudulently acquiring $2.5 million in valuable NFTs, digital certificates of ownership for works of art that can be traded online, prosecutors in Paris said.
The charges against the five young adult suspects in the theft include fraud committed as part of a criminal gang, concealment of fraud and criminal association.
Prosecutors believe the group fraudulently gained control of the NFTs between late 2021 and early 2022 – an acronym for “non-replaceable token”.
They include several of the cartoon monkey portraits called “Bored Apes” which are among the best known and most sought after digital art items.
A report earlier this year by Immunefi – a security firm targeting the blockchain-powered “web3” world – found that nearly $14 million worth of NFT monkeys had been stolen on trading platform OpenSea.
The total value of the French gang’s loot is estimated at about $2.5 million, investigators said Wednesday.
Prosecutors said they had identified five victims of the fraud so far, with one of them losing control of a bored monkey worth nearly a million dollars. NFTs record ownership of an asset using the same blockchain technology behind cryptocurrencies such as bitcoin – although other people can still easily make copies of digital artworks such as images or video.
As with the currencies themselves, the NFT sector—which includes everything from computer game avatars to cartoon monkeys—is rife with scams, counterfeits, thefts, and laundromats.
– Phishing scheme –
France’s OCLCTIC cybercrime authority tracked down the thieves after an internet user, “ZachXBT”, posted their own investigation online, Deputy Head Christophe Durand told AFP.
ZachXBT followed up on complaints from “the community of owners of the Bored Ape Yacht Club range of limited edition monkeys,” Durand said.
Celebrities including Paris Saint-Germain footballer Neymar, Eminem and Paris Hilton have all said they are Bored Ape owners.
The alleged fraudsters set up a site that offers NFT holders a service that would animate the static images they owned.
In fact, it was a phishing operation that allowed the group to obtain the credentials of the unwitting users in order to transfer ownership of the NFTs.
The five accused were all young adults born between 1998 and 1993. The parents of one of the group were released without charge.
Prosecutors have requested that two suspects, believed to be the ringleaders, be held in pre-trial detention.
While crypto assets have been routed this year with declining values, project collapse and growing scandals, the NFT arts sector has weathered the storm better than other parts of the crypto world.
NFT artworks accounted for about $2.8 billion in sales last year, and the percentage declined only slightly in the first half of this year, according to analyst firm NonFungible.