Two 23-year-olds from California, Gabriel Hay and Gavin Mayo, have been arrested in Los Angeles for allegedly orchestrating an NFT rug pull that defrauded investors of over $22 million in cryptocurrency assets. According to the United States Department of Justice (DOJ), the duo now faces charges of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking.
How the NFT Rug Pull Scheme Worked
The DOJ alleges that Hay and Mayo promoted multiple NFT and digital asset projects through various marketing campaigns, making false promises to investors. The projects were backed by misleading roadmaps, outlining future plans that they never intended to fulfill.
One such project, the Vault of Gems NFT, was promoted as the first NFT project “pegged to a hard asset.” However, prosecutors claim the two abandoned the project after collecting millions of dollars from investors. The indictment also lists other projects involved in the scheme, including Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin.
Threats and Intimidation Tactics
The charges go beyond fraud. Principal Deputy Attorney General Nicole Argentieri noted that when a project manager attempted to expose Hay and Mayo’s fraudulent activities, the duo resorted to harassment and threats.
“Gabriel Hay and Gavin Mayo allegedly defrauded investors in digital asset projects of tens of millions of dollars and threatened an individual who attempted to expose their roles in these fraudulent schemes,” Argentieri said. The indictment claims they intimidated the whistleblower and their family, further escalating their criminal conduct.
Efforts to Conceal Their Involvement
Prosecutors allege that Hay and Mayo used various tactics to hide their roles in these fraudulent projects, including falsely identifying others as project owners. By distancing themselves from the scams, they aimed to evade responsibility while continuing to mislead investors.
DOJ’s Commitment to Combat NFT Rug Pulls and Crypto Fraud
The Justice Department has reiterated its dedication to uprooting fraudulent activities in the crypto and NFT space. Principal Deputy Attorney General Argentieri stated:
“Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money. We will continue working with law enforcement to protect investors and bring these criminals to justice.”
The DOJ emphasized that Hay and Mayo’s fraudulent tactics reflect a broader trend of exploitation in the digital asset space, underscoring the need for vigilance and regulatory oversight.
The arrest of Gabriel Hay and Gavin Mayo highlights the risks associated with investing in digital assets and NFTs. Their NFT rug pull scheme, which defrauded investors of $22 million, is a stark reminder of the importance of due diligence in the volatile world of cryptocurrencies. As the Justice Department intensifies its crackdown on crypto fraud, this case underscores the need for stricter regulations to protect investors from similar scams.
Investors are urged to exercise caution when engaging with NFT projects, especially those that make lofty promises without clear evidence of delivery. The ongoing fight against digital asset fraud aims to ensure greater accountability and transparency in the rapidly growing crypto ecosystem. Stay updated with the latest developments in the cryptocurrency industry through The BIT Gazette, offering comprehensive insights into current events shaping the sector.
