Accused of an NFT Scam? What to Know

Non-Fungible Tokens (NFTs) have emerged as a significant source of interest among investors and others adventurous enough to explore the new digital phenomenon. In just one year, NFT trading involved more than $17 billion.

NFT scams have become a focal point for law enforcement scrutiny, leading to increased prosecutions against individuals accused of NFT-related fraud. Defending against charges of involvement in an NFT scam requires a nuanced understanding of both the technology behind NFTs and the criminal statutes governing digital assets and fraud.

What Is an NFT Scam?

NFT scams can vary widely in their mechanics and execution but generally involve deception related to the sale, trade, or promotion of NFTs. Common examples include selling counterfeit NFTs, creating a fake NFT marketplace, or promising fraudulent returns on NFT investments. Other NFT scams involve someone offering a free NFT as a promotional perk and then obtaining the victim’s digital wallet information, giving them an opportunity to steal the account’s NFT and cryptocurrency.

Accusations of involvement in these scams can lead to serious criminal penalties for wire fraud, money laundering, and violations of securities law such as insider trading, among others.

Stechschulte Nell, Attorneys at Law understand the technology involved in NFT transactions and our defense lawyers have extensive experience effectively defending people accused of these and other white-collar crimes in both federal and state courts. If you are under investigation or charged with a crime related to NFTs, contact our office today for a full case analysis and consultation.

Key Defense Strategies

While NFT-related fraud prosecutions revolve around the unique characteristics of digital tokens, they also require the prosecution to prove essential factual elements of the crime beyond a reasonable doubt, just as they must in all fraud prosecutions.

Experienced criminal defense lawyers have the necessary knowledge and skill to defend NFT fraud charges. The comprehensive strategies employed in each case depend on the individual facts, but some effective defenses always involve intense scrutiny of the government’s evidence and involve one or more of the following approaches:

Challenging the Evidence

A critical first step in any defense is meticulously examining the prosecution’s evidence for weaknesses or inconsistencies. This involves:

Technical Analysis: Engage experts to scrutinize the digital trails and blockchain records related to the NFT transactions in question. This analysis can uncover evidence of legitimate transactions or identify flaws in the prosecution’s assertion that the transaction was fraudulent.
Documentary Evidence: Review all communication and marketing materials to establish the context of the transactions. This can help demonstrate the defendant’s transparency in sharing information and the absence of deceptive intentions.

Demonstrating Lack of Intent

Fraud charges always require the prosecution to prove intent to deceive. Demonstrating that the defendant lacked fraudulent intent is an effective and powerful defense. This might involve showing that the defendant believed in good faith that the NFTs were legitimate, there was full disclosure of relevant information to potential buyers or investors, and that any misrepresentations were unintentional and resulted from misunderstandings or miscommunications rather than deceit.

Highlighting Procedural Errors

Identifying procedural errors in how the law enforcement agents’ investigation was conducted or how the prosecution brought the charges can lead to dismissal of the case or reduction of charges. This could involve pointing out:

Violations of the defendant’s constitutional rights during the investigation.
Improper handling or chain of custody of digital evidence.
Failure to follow prescribed statutory legal processes in filing charges.

Potential Cooperation with Authorities

In certain cases, cooperating with the investigation can be advantageous, especially if the defendant possesses information that can assist in identifying the actual perpetrators of the scam. Such cooperation must be carefully managed and negotiated by an experienced federal or state criminal defense lawyer who can ensure the best possible outcome for the defendant.

Settlement and Plea Bargains

Exploring the possibility of a settlement or plea bargain is sometimes a pragmatic approach, especially when the evidence against the defendant is strong. Negotiating a plea for lesser charges or penalties can sometimes be the most favorable option, but it requires a defense lawyer’s scrupulous legal evaluation to ensure it’s in the defendant’s best interest.

These processes necessarily require a close working relationship between the defense lawyer and the client, including an intensely thorough and penetrating discussion of every aspect of the case, including the significance of the government’s strongest evidence and an assessment of the prosecution’s weaknesses. Counsel must also rely on their hard-earned experience to provide their client with their best, most informed professional advice about the relative likelihood of conviction or acquittal.

Only by engaging in a completely frank and open exchange of questions and answers can the defendant make the most informed and intelligent decision on whether they should proceed to trial or approve of a negotiated plea.

These important discussions occur most productively when the client trusts their defense lawyer’s knowledge, experience, and integrity.

At Stechschulte Nell, Attorneys at Law, we have earned our clients’ trust by performing at the highest professional level and extending our genuine concern for them and their families. Our devotion to our client’s best defense is a constant component of our legal services.

Stechschulte Nell, Attorneys at Law – Experienced Criminal Defense

Defending against charges of involvement in an NFT scam is a complex process that demands a deep understanding of both the technical aspects of NFTs and the legal principles of fraud defense.

People facing such charges should seek help from experienced fraud defense lawyers who understand digital assets and can navigate these complex topics effectively.

In Florida, Stechschulte Nell, Attorneys at Law is ready to provide you with knowledgeable and effective fraud defense, whether in state or federal court. Don’t wait, give us a call today.