A federal jury convicted a man for orchestrating an NFT rug pull scheme, pocketing nearly $400,000 through abandoned projects and cryptocurrency laundering schemes.
The NFT Rug Pull That Went Too Far — Federal Jury Brings Verdict
The U.S. Department of Justice (DOJ) announced Thursday that a federal jury in Tampa, Florida, found Berman Jerry Nowlin, Jr., also known as “Repulse” and “Zayous,” guilty of conspiracy to commit wire fraud and money laundering through a cryptocurrency scheme involving non-fungible tokens (NFTs).
Nowlin, 21, and his codefendant, Devin Alan Rhoden, known as “Denny” and “Deviinz,” created NFT collections on the Solana blockchain titled “UndeadApes” and “Undead Lady Apes.” The DOJ noted that after an increase in resale prices:
Nowlin and Rhoden used the success and enthusiasm from the first two collections to perpetrate a ‘rug pull,’ a cryptocurrency investment fraud scheme where developers abandon a project, take investor funds, and leave investors with a worthless asset.
This tactic led to the release of a third collection, “Undead Tombstone,” which was quickly abandoned, leaving investors with valueless NFTs. Nowlin’s sentencing is set for Jan. 23, 2025.
According to the Justice Department, “The mint resulted in approximately $135,000 in cryptocurrency being sent to cryptocurrency wallets under the control of Nowlin and Rhoden.” The DOJ further detailed:
Using decentralized cryptocurrency tumbler Tornado Cash, Nowlin moved the fraud proceeds from the Solana blockchain to the Ethereum blockchain, also known as ‘chain-hopping.’
Following these transactions, “Nowlin then used the cryptocurrency to purchase U.S. dollars and transferred that currency into his bank account. In a matter of weeks, the three NFT collections resulted in Nowlin and Rhoden receiving nearly $400,000 in cryptocurrency from hundreds of victim-investors all over the world.” Rhoden pled guilty to similar charges in May 2024, with sentencing scheduled for Nov. 20, 2024.
