Florida Jury Convicts UndeadApes NFT Creator of Fraud

A federal jury in Tampa, Florida, has convicted Berman Jerry Nowlin Jr., the cocreator of the controversial NFT collections "UndeadApes" and "Undead Lady Apes," of conspiracy to commit wire fraud and money laundering. This verdict follows a series of fraudulent activities that deceived investors out of nearly $400,000.

Key Takeaways

• Berman Jerry Nowlin Jr. found guilty of wire fraud and money laundering.

• His cocreator, Devin Alan Rhoden, pleaded guilty to the same charges.

• The fraudulent scheme involved three NFT collections: "Undead Apes," "Undead Lady Apes," and "Undead Tombstone.

• Nowlin faces a maximum of five years in prison, with sentencing set for January 2025.

Background Of The Case

The case centers around the NFT collections launched in March 2022, which were marketed as colorful zombie avatars reminiscent of the popular Bored Ape Yacht Club. The collections quickly gained traction, with the average sale price of the "UndeadApes" peaking at approximately $360.

However, the situation took a turn when Nowlin and Rhoden announced a third collection, "Undead Tombstone," in April 2022. They made exaggerated claims about the utilities of the NFTs, partnerships, and reinvestment plans, which were later revealed to be false.

The Fraudulent Scheme

1. Launch of Collections:

2. Misleading Marketing:

3. Execution of the Rug Pull:

Money Laundering Tactics

Nowlin employed sophisticated methods to launder the proceeds from the fraudulent activities. He utilized Tornado Cash, a decentralized cryptocurrency tumbler, to obscure the trail of funds. This involved:

• Transferring proceeds from the Solana blockchain to the Ethereum blockchain.

• Converting cryptocurrency into U.S. dollars and depositing it into his bank account.

Legal Consequences

The U.S. Attorney’s Office has classified the actions of Nowlin and Rhoden as a classic "rug pull"—a term used in the cryptocurrency world to describe a scenario where developers abandon a project after taking investors' money. Nowlin now faces a maximum sentence of five years in federal prison, while Rhoden's sentencing is scheduled for November 2024.

Broader Implications

This case is part of a growing trend of legal actions against NFT creators accused of fraud. The U.S. Securities and Exchange Commission (SEC) is increasingly scrutinizing the NFT market, aiming to regulate it and protect investors from similar scams. The guilty verdict serves as a warning to potential investors about the risks associated with digital assets and the importance of due diligence in the rapidly evolving cryptocurrency landscape.

Sources

• UndeadApes NFTs CoCreator Found Guilty of Fraud and Money Laundering, ARTnews.com.

• Creator of ‘Undead Apes’ NFT Is Found Guilty of Defrauding Investors, Artnet News.