US Air Force officer arrested for alleged NFT fraud

In one of the first major NFT criminal cases to date, a US Air Force cyber analyst was arrested for his role in a “rug pull” scheme, in which a digital asset is promoted to dupe an investor before the project is killed.

According to court documents, Devin Alan Rhoden promoted UndeadApes NFTs (a titular reference to the famous Bored Ape Yacht Club NFT suite) to an unnamed Air Force veteran in an UndeadApes channel on the social platform Discord. Under the username Deviinz, Rhoden falsely inflated the value of the average price of the NFTs, leading members to believe that the UndeadApes brand was collaborating with a larger NFT collective known as Stoned Ape Crew. Stoned Ape Crew later revealed that no such collaboration existed, leading the purported value of UndeadApes NFTs to drop, rendering the assets “worthless”, according to the victim. The ringleader of the UndeadAples Discord channel, communicating under the username Denny, signed off of the Discord by telling members, “Yall are dumb as f**k,” shortly before the account was deleted altogether.

The filing states that Rhoden collected and withdrew $80,000 from his Coinbase account in April 2022, a large percentage of which was related to the alleged fraudulent activity. The following month, Rhoden and his wife purchased a $300,000 home in Florida, bolstered by bank statements “reflecting the fraud proceeds”. Given that Rhoden’s Coinbase account was connected to his driver’s license, these transgressions were enough to establish a search warrant for his Google profile, which revealed a number of suspicious searches, like “does logs show on discord if they delete their account,” “what happens if a utility nfts rugs” and “wire fraud court martial”.

Discord logs allegedly show that Rhoden was bragging about the money he had extracted from the NFT group. A subsequent interview between Rhoden and two members of the Air Force Office of Special Investigations—during which Rhoden admitted to “marketing his services to NFT developers” via Discord using the name Deviinz—revealed that he denied any knowledge of fraud but acknowledged that he believed his cyber analyst career could be used in the Web3 space, court filings state. Rhoden is currently out on a $20,000 bond; court dates have yet to be scheduled.

As the NFT sphere enters a craterous period, with GameStop closing its NFT marketplace and numerous wire-fraud cases going to court, Rhoden’s fate will no doubt set a pace for the future of digital-asset trading.