Five people were charged in France Wednesday on suspicion of fraudulently acquiring $2.5 million of valuable NFTs, digital certificates of ownership for artworks that can be traded online, Paris prosecutors said.
Charges against the five young adult suspects over the theft include fraud committed as part of a criminal gang, concealing fraud and criminal association.
Prosecutors believe the group fraudulently acquired control of the NFTs — an acronym for “non-fungible token” — between late 2021 and early 2022.
They include several of the cartoon monkey portraits dubbed “Bored Apes” that are among the best-known and most sought-after digital art assets.
A report earlier this year by Immunefi — a security firm focussing on the blockchain powered “web3” world — found almost $14 million worth of the NFT apes had been reported stolen on trading platform OpenSea.
The total value of the French gang’s haul is estimated at around $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 Ape worth almost one 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 covers anything from avatars in computer games to cartoon apes — is replete with scams, counterfeit works, thefts and wash trading.
– Phishing scheme –
France’s OCLCTIC cyber-crime authority got on the trail of the thieves after an Internet user, “ZachXBT”, posted their own investigation online, its deputy chief Christophe Durand told AFP.
ZachXBT was following up on complaints from “the community of owners of the Bored Ape Yacht Club series of limited edition monkeys”, said Durand.
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 offering a service to NFT holders that would animate the static images they owned.
In fact, the fact it was a phishing operation that allowed the group to acquire the credentials from the unwitting users to transfer ownership of the NFTs.
The five people charged were all young adults born between 1998 and 1993. The parents of one of the group have been released without charge.
Prosecutors have asked that two suspects, believed to be the ringleaders, be held in pre-trial detention.
Although crypto-assets have been routed this year with plunging values, collapsing projects and widening scandals, the NFT art sector has weathered the storm better than other parts of the crypto world.
NFT artworks accounted for some $2.8 billion in sales last year and the rate declined only slightly in the first half of this year, according to analyst firm NonFungible. ©AFP