Two California men have been accused of masterminding a series of NFT rug pulls that resulted in over $22 million being taken from buyers, according to a press release issued by the US Department of Justice (DOJ) on Friday. This is reportedly the largest NFT scheme that the department has ever prosecuted.
Gabriel Hay of Beverly Hills and Gavin Mayo of Thousand Oaks were both charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking. They were apprehended in Los Angeles on Thursday. “For three years, Hay and Mayo apparently lied to their investors in order to defraud them out of millions of dollars,” said Katrina W.
Berger, executive associate director of Homeland Security Investigations, in a statement. “Such technological fraud schemes cost investors millions of dollars every year.”
Between May 2021 and May 2024, Hay, who also used the pseudonyms Mr. Handz, Diamondhandz, Centurion, and Vaultkeeper, and Mayo, who went by Gavinm, reportedly promoted numerous NFT projects on the Ethereum and Solana blockchains using false claims and deceptive project roadmaps.
This included well-known collections such as Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin. According to the indictment, the pair and their accomplices falsely claimed that the Vault of Gems NFT collection would be backed by real-world assets like jewelry, making similar claims about their other projects which ultimately proved to be empty promises.
They allegedly collected millions of dollars from unsuspecting investors before suddenly abandoning the projects, leaving many holders with worthless tokens in their wallets. Furthermore, the indictment also accuses Hay and Mayo of harassing a project manager from the Faceless NFT project after they were exposed for their fraudulent activities.
If found guilty, both individuals could face up to 20 years in prison for each of the conspiracy and wire fraud charges, along with an additional five years for stalking. This case highlights the importance of vigilance and due diligence when investing in cryptocurrencies or any other digital asset class.
As with any emerging technology, there will always be opportunists looking to take advantage of unsuspecting individuals. It’s crucial to stay informed about potential red flags and always do your own research before making any significant investments.
Source
As per reported by decrypt.co
