This is a segment from the Empire newsletter. To read full editions, subscribe.
This is not a happy story. But I can’t get it out of my head.
Earlier this month, it was reported that 21-year-old Alabama resident Berman Nowlin — convicted of wire fraud and money laundering charges over an NFT rug pull in 2022 — had died by suicide.
A district court in Florida had ruled him guilty only three weeks earlier. He was due for sentencing later in January and faced a maximum sentence of five years in prison.
The rug pull in question referred to a short-lived Bored Apes-inspired project Undead Apes Society, which included three NFT collections released over two months.
Nowlin was described as the developer who coded the smart contracts.
A second individual, Devin Rhoden, managed the art model engine for the NFTs. Rhoden is a 23-year-old senior airman in the US Air Force who worked as a cyber analyst.
Here’s the timeline as presented in court filings:
March 2022: 2,500 Undead Apes NFTs were minted on Solana for 0.05 SOL each (~$10,000 at the time). UndeadApes were “unique Apes with over 60 hand-drawn traits on the Solana blockchain. Ready to take on the Metaverse.”
Later in March 2022: 750 Undead Lady Apes were minted on Solana for 0.75 SOL each (~$53,400). These had supposed DeFi functions — stakers would earn up to 6x, 75% of royalties would go back into the liquidity pool, with the rest going toward paying the team.
April 2022: Floor prices for the initial Undead Apes collections reached 3.6 SOL (~$400) and 6 SOL ($660), respectively. In terms of SOL, that’s 72x and 8x on their initial mint prices.
Later in April 2022: A third mint was announced for Undead Tombstones, featuring a collaboration with Stoned Ape Crew, an unaffiliated project, which allegedly drove up mint prices.
Tombstones were said to come with additional features for existing Undead Apes holders that could generate additional return on investment.
Two hours later: The Stoned Ape Crew denies any partnership or involvement with Undead Apes Society. The Undead Apes team abandons the mint shortly after — taking the proceeds — and floor prices for all related NFTs immediately crash 85%.
Discord members then received a message from Rhoden in the Undead Apes Society chat saying, “Yall are dumb as fuck.”
Authorities traced earnings from the rug pull amounting to $161,548, which had been cashed out into US dollars and split about evenly between the bank accounts of Nowlin and Rhoden.
Going by the evidence supplied by the prosecutors, there appeared to be a plan to rug the entire time. The Feds were initially tipped off by another Air Force member who lost money in the scheme.
Still, two things are haunting me. The first thing is the relatively low amount of money extracted from the rug pull.
Perhaps I’m desensitized by much larger fraud cases over the years, but it was still enough for Rhoden to receive five years probation after pleading guilty, and his testimony is said to have led to the conviction of Nowlin, now deceased.
The other is that Nowlin had been diagnosed with autism. His family described him as above-average when it came to intelligence but he had the emotional maturity of a 14-year-old. He reportedly taught himself to code and spent most of his time online, playing video games and chatting in Discords.
There is so much about crypto that is larger than life — often larger than any life we could ever imagine. But the Undead Apes rug pull wasn’t any of that.
People, of course, lost money very quickly. Who knows what would have happened had the team actually followed through on their promises. More than likely, they would have still lost money.
Usually, reading about rug pulls comes with some schadenfreude. Perps get caught under all sorts of silly circumstances, which makes for compelling crime stories.
Fraud is bad and bad actors should be caught. That’s what happened with the Undead Apes rug pull. Woefully, though, it now serves as a dark reminder that while the money and assets are silly and digital, the stories are painfully real.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.
Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.
The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
