Two NFT developers are facing serious legal issues after a major NFT scam. One has been found guilty, while the other has pleaded guilty in a U.S. court. They are charged with conspiracy to commit wire fraud and money laundering.

This case involves three NFT collections on the Solana blockchain: “Undead Apes,” “Undead Lady Apes,” and a partial sale of “Undead Tombstone.” These NFTs were minted for just $5 each in 2022. Together, they pulled in $135,000 for wallets controlled by Berman Jerry Nowlin Jr., 21, and Devin Alan Rhoden, 25.

Over the next few weeks, the total amount swindled grew to nearly $400,000. Many victims invested in these projects, with “Undead Apes” reaching a peak price of $360 per NFT.

The Department of Justice (DOJ) reported that the projects thrived on “outright false statements.” These included misleading claims about future partnerships with well-known companies and promises about how much money would be reinvested back into the project.

In April 2022, just a month after launching “Undead Apes,” the developers began minting 632 “Undead Tombstone” NFTs. But they abruptly stopped, executing what’s known as a rug pull. They deleted their Discord and Twitter accounts, cutting off all communication with their community.

The DOJ defines a rug pull as “a cryptocurrency investment fraud scheme where developers abandon a project, take investor funds, and leave investors with a worthless asset.”

To hide their tracks, the developers used a crypto mixer called Tornado Cash, which is now banned in the U.S. They moved funds between Solana and Ethereum, using a technique called “chain-hopping” to confuse anyone trying to trace their transactions. Nowlin then converted the cryptocurrency into U.S. dollars and deposited the money into his bank account.

Recently, it was announced that Nowlin was found guilty of conspiracy to commit wire fraud and money laundering related to the rug pulls. He could face up to five years in federal prison, with sentencing set for January 2025.

Rhoden, who lives in Florida, pleaded guilty to similar charges in May 2024. His sentencing is scheduled for later this month.