Evolved Apes: Coinfirm Demonstrates NFT Compliance with Scam Case Study

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‘Evolved Apes’ was a much-hyped new PFP (profile picture) NFT project, with the 10,000 unique tokens selling out in 10 minutes. The minting of the tokens and some secondary sales generated millions of USD.

But on September 24, 2021 the main developer of the project, ‘Evil Ape’, and the project’s creators then rug pulled the coffers of the project of USD 2.7 million of USD in 798 ETH, shut down the official website and pulled down the Twitter profile of Evolved Apes (they didn’t even pay the artist who helped create the digital images).

The NFTs owned by investors were promised to be utilized in an NFT-based gaming platform, which did not materialize. According to the project’s roadmap; “Owning an EvolvedApe is the only way to be part of the Ape Kingdom, this comes with exclusive benefits now and as the project grows and expands. The benefits will vary in nature and will be developed along with all members of the Ape Kingdom. One of the big reveals that we can announce for our members is the development and launch of our game, this will be an action packed game utilising our NFTs as playable characters. They will have base stats and traits that will aid them in battles against their opponents. As you play more of the game they will level up, improving their stats and granting them more effective traits, this will increase their battle power as well as their value. We also plan to host daily tournaments within the game, these will reward players competing in ETH, with players also being able to gamble on the outcome of their matches resulting in battles with even higher stakes. May the best man win, I mean ape win.”

What is most unfortunate for people scammed by an NFT project is that often royalties are paid to the project’s creator in any subsequent secondary sale. Thus, not only has the price of any Evolved Ape token dropped significantly from their original minting price, but that any victim of the rug pull that wishes to sell them on must also pay 4% to the scammer.

Coinfirm was the first crypto AML firm to add the ERC-721 (NFT) token standard to its anti-money laundering platform to assess the risk of non-fungible tokens associated with various crypto crimes, as art has also been a vector in fiat money laundering due to the subjective nature of pieces.

The below graph shows addresses in red receiving the stolen funds directly from the Evolved Apes smart contract. The ETH then went to a number of well-known crypto exchanges (shown in purple) – many of which work closely with Coinfirm – that deploy good Know Your Customer (KYC) practices. Because all of these addresses have been marked in Coinfirm’s AML Platform, these exchanges will be aware of the stolen funds moving through their systems. In addition, the deployer of the smart contract – most likely ‘Evil Ape’ – funded the address (0x992228c6903caa66f0e79b1129d36be780eaf6ac) with 6.015 ETH from a large, well-known exchange.

Evolved Apes_Rug Pull

However, the best tool to follow stolen funds with real-time alerts of their movements is Coinfirm’s new tool, C-Live, for asset recovery, dispute services and risk and due diligence (graph click-through tools are not suitable to solve a crime where extensive mixing is used).

Looking to track the flow of funds from hacks and scams or comply with certain jurisdictions’ AML and CFT regulations? Contact Coinfirm today.

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