TAMPA — The images appeared two years ago on social media and in cryptocurrency-themed chat rooms. Colorful squares depicted skeletonized primates, some with flashy hairstyles, some with fire bursting from eye sockets.
The captivating cartoon stills were part of a pair of nonfungible token collections traded on the Solana blockchain. They were known as “Undead Apes” and “Undead Lady Apes.” Buzz about them pushed their resale value as high as $360 and spurred excitement over a third collection, “Undead Tombstone.”
But it was a sham. That April, hundreds of investors in the collections lost money in what federal prosecutors said was a “rug pull” fraud scheme that ripped off investors and netted two blockchain developers $135,000.
On Wednesday, one of those developers, a U.S. Air Force staff sergeant at MacDill Air Force Base, avoided a prison sentence for his role in the scheme.
U.S. District Judge William Jung sentenced Devin Rhoden to five years’ probation, a reflection of Rhoden’s substantial assistance to prosecutors.
Rhoden, 22, pleaded guilty earlier this year to a charge of conspiracy to commit wire fraud and money laundering. He testified last month at the trial of his co-defendant, Berman Jerry Nowlin, a friend he’d known since childhood.
Nowlin, 21, of Alabama was convicted of the same charge and awaits a January sentencing date.
In court Wednesday, Assistant U.S. Attorney Carlton Gammons said Rhoden’s cooperation was essential in securing Nowlin’s conviction and that investigators first built a case against him in the hope he would flip. Rhoden also helped federal prosecutors understand the complex workings of cryptocurrency, blockchains and nonfungible tokens. It’s a world, the prosecutor said, where fraud is rampant and identifying victims is difficult.
“It’s like the wild, wild west,” Gammons said.
Judge Jung expressed curiosity about the unusual nature of the fraud, likening nonfungible tokens to Pokemon cards, and wanting to know what real value they had. The prosecutor explained that their primary draw is their uniqueness and collectability. Those who own them can sometimes get access to exclusive events and promotions.
The case began when an Air Force veteran reported to military investigators that he suspected Rhoden was behind the fraud, according to court records.
The veteran, who was not named in court records, told the Air Force Office of Special Investigations that he was a member of a chat room on the Discord messaging platform called the “Undead Apes Society.” The chat room focused on the development of the Undead Apes blockchain.
Its developers used the screen names “Denny” and “Deviinz.” They promoted the Undead Apes and Undead Lady Apes collections on Discord and the social media platform X, formerly known as Twitter.
Amid promises of high returns, sale prices for the collections by early April 2022 had surged into the equivalent of hundreds of dollars.
The developers then announced to the Undead Apes Society that they would create a third nonfungible token collection dubbed “Undead Tombstone,” according to information the veteran told investigators. They promised further cryptocurrency earnings for those who already owned nonfungible tokens with certain traits if they purchased the new collections.
As the Undead Tombstone collection was being created, “Denny” announced on X that the developers were collaborating with “Stoned Ape Crew,” described as a well-known and successful nonfungible token project.
The collaboration was a lie, federal investigators said, designed to further increase the price of the Undead Tombstone collection.
Not long thereafter, the developers abandoned the creation of Undead Tombstone, causing prices to plummet.
“Yall are dumb as f—k,” Denny wrote to the Undead Apes Society. His Discord and X accounts vanished.
All together, the three collections netted Nowlin and Rhoden close to $400,000, prosecutors said, while leaving investors with worthless assets.
Victims in the scheme later helped investigators link the “Deviinz” name to social media accounts belonging to Rhoden. Investigators conducted a complex financial analysis, which traced the funds to an online program that facilitates the movement of one blockchain to another. The technique was described in court records as a form of money laundering known as “chain hopping.”
The funds were converted from Solana to the Ethereum blockchain, then split equally and deposited into two Coinbase wallets. One of the wallets belonged to Rhoden, according to court records, and was linked to his bank account. The other belonged to Nowlin.
Within weeks of the theft, records showed Rhoden purchased a Pinellas Park home for $305,000.
Investigators later uncovered Discord chats between Rhoden and Nowlin in which they talked about the theft.
“I was able to put a down payment on a house,” Rhoden wrote in one exchange. “Buy my dream car outright. Have over 6 months of expenses in savings.”
“Rich,” Nowlin replied.
“Be able to remodel my house to increase its worth,” Rhoden said. “And still have money leftover.”
Rhoden’s attorney, Assistant Federal Defender Adam Allen, described his client’s conduct as a youthful mistake that carried profound consequences. He still faces separate military disciplinary proceedings, at which it was anticipated he would receive something other than an honorable discharge.
Rhoden swiveled slightly in his chair as he addressed the judge. He vowed to pay back the money he took.
“I apologize to all the victims,” he said. “It was a stupid mistake, a lapse in judgment.”
The judge said he found Rhoden to be a good and truthful witness at Nowlin’s trial. In addition to probation, he ordered him to complete 500 hours of community service. He warned him to stay out of trouble.
“Even though I seem like a nice guy, you don’t want to see me again,” Jung told Rhoden. “If I see you again, bring your toothbrush.”
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