NFT promoters face fraud charges over alleged $22M rug pull
Two 23-year-olds from California who allegedly defrauded investors of over $22 million in crypto assets through a series of non-fungible token (NFT) rug pulls were arrested in Los Angeles and face fraud charges.
In a news release, the Office of Public Affairs of the United States Department of Justice said Gabriel Hay and Gavin Mayo had each been charged with a single count of conspiracy to commit wire fraud, two counts of wire fraud and one count of stalking.
The duo allegedly sponsored and promoted NFT and digital asset projects and performed promotional activities to support the projects. The Justice Department charged that they made or caused other people to make “materially false and misleading statements” about the digital asset projects.
Prosecutors also alleged that Hay and Mayo provided misleading and false project roadmaps with plans for the NFT and digital asset projects they did not intend to fulfill.
NFT sponsors face fraud charges
The indictment says Hay and Mayo promoted the Vault of Gems NFT project by saying it would be the first NFT project “pegged to a hard asset.” Despite the promise, prosecutors claim that the duo abandoned the project after collecting millions from investors.
Principal Deputy Attorney General Nicole Argentieri, head of the Justice Department’s Criminal Division, said the two resorted to threats when someone attempted to expose them. Argentieri said:
“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.”
The release said that when one project manager exposed the duo for being behind the Faceless NFT project, the two harassed that person, intimidating him and his family.
The Justice Department said the two men used fraudulent tactics with various digital asset projects, which included Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles and Roost Coin.
The government officials said Hay and Mayo also used different tactics to conceal their project involvement by falsely identifying others as project owners.
The prosecutors said their department will work with law enforcement to uproot crypto and other digital asset fraud. “Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money,” Argentieri said.
