Federal prosecutors have charged two California males within the largest nonfungible token (NFT) fraud scheme prosecuted so far, alleging they defrauded traders of greater than $22 million via a collection of digital asset “rug pulls.” The six-count indictment, unsealed on Friday, accuses Gabriel Hay, 23, of Beverly Hills, and Gavin Mayo, 23, of Thousand Oaks, of orchestrating fraudulent NFT and cryptocurrency tasks and abandoning them after accumulating hundreds of thousands from traders.
From Might 2021 to Might 2024, Hay and Mayo allegedly promoted quite a few NFT and digital asset tasks, together with Vault of Gems, Faceless, and MoonPortal, via false and deceptive statements, in line with court docket paperwork. Prosecutors say the pair offered fraudulent challenge “roadmaps,” detailing bold plans they by no means supposed to meet. One instance cited within the indictment concerned the Vault of Gems challenge, the place Hay and Mayo marketed the NFTs as being “pegged to a tough asset,” a declare authorities say was fabricated.
“Gabriel Hay and Gavin Mayo allegedly defrauded traders in digital asset tasks of tens of hundreds of thousands of {dollars} and threatened a person who tried to show their roles in these fraudulent schemes,” mentioned Principal Deputy Lawyer Normal Nicole M. Argentieri, head of the Justice Division’s Prison Division. She added, “Fraudsters make the most of new applied sciences and monetary merchandise to steal traders’ hard-earned cash. The division is dedicated to defending traders and can proceed to work with our legislation enforcement companions to root out fraud involving cryptocurrency and different digital property and convey offenders to justice.”
The indictment additionally alleges that Hay and Mayo focused a supervisor of the Faceless NFT challenge who uncovered their involvement. Prosecutors declare the 2 launched a harassment marketing campaign in opposition to the supervisor and his household, sending threatening messages designed to trigger emotional misery.
“For 3 years, Hay and Mayo apparently lied to their traders with a purpose to defraud them out of hundreds of thousands of {dollars},” mentioned HSI Govt Affiliate Director Katrina W. Berger. “Such technological fraud schemes price traders hundreds of thousands of {dollars} yearly. Simply because such crimes aren’t violent doesn’t imply they’re victimless. HSI will proceed to analyze, disrupt, and dismantle such cryptocurrency fraud networks.”
Hay and Mayo face one rely of conspiracy to commit wire fraud, two counts of wire fraud, and one rely of stalking. If convicted, they every withstand 20 years in jail for the conspiracy and wire fraud costs and as much as 5 years for stalking.
“Every time a brand new funding pattern happens, scammers are positive to comply with,” mentioned U.S. Lawyer Martin Estrada for the Central District of California. “My workplace and our legislation enforcement companions will proceed our efforts to guard customers and punish wrongdoers concerned in crypto fraud.”
Authorities say Hay and Mayo tried to hide their involvement within the tasks by falsely figuring out others as challenge house owners. The indictment alleges they used related techniques throughout numerous tasks, together with Clout Coin, Soiled Canine, and Roost Coin, amongst others.
The case is being investigated by Homeland Safety Investigations (HSI) Baltimore and prosecuted by Trial Attorneys Tian Huang and Tamara Livshiz of the Justice Division’s Nationwide Cryptocurrency Enforcement Crew (NCET), together with Assistant U.S. Lawyer Maxwell Coll for the Central District of California. The NCET was established to deal with the rising illicit use of digital property and to fight cryptocurrency-related crimes.
Authorities are urging anybody who believes they have been defrauded by the schemes described to contact legislation enforcement at rugpullvictims@hsi.dhs.gov.
