Two California men have been charged with masterminding a series of NFT scams that collected more than $22 million from buyers, the U.S. Department of Justice said in an indictment unsealed on Friday. The DOJ said the case was the largest NFT scheme ever prosecuted.
Gabriel Hay of Beverly Hills and Gavin Mayo of Thousand Oaks were each charged with one count of wire fraud, one count of wire fraud and one count of stalking. The men were arrested Thursday in Los Angeles.
“For three years, Hay and Mayo lied to defraud their investors out of millions of dollars,” Homeland Security Investigations Director Katrina W. Berger said in a statement. “Such technological fraud schemes cost investors millions of dollars each year.”
From May 2021 to May 2024, Hi—by “Mr. Handz, “Diamondhanz”, “Captain” and “Vaultkeeper”—and Mayo, who goes by “Gavin”—are accused of promoting NFT projects with false claims and misleading project maps.
Carpet dragging occurs when a developer creates a token, falsely claims to have plans for future development, sells the token based on these empty promises, and then suddenly loses money to investors.
According to the indictment, Hai and Mayo defrauded unsuspecting victims of NFT projects based on Ethereum and the Solana blockchain, including Vault of Games, Faceless, Sinful Souls, Klout Coin, Dirty Dog, Uncovered, Moonportal, Squiggles, and Roost Coin.
According to the DOJ, the duo and others made claims that the Vault of Gems NFT collection ties to real-world assets such as jewelry, and similar claims that have not been made in other projects.
Prosecutors say Hay and Mayo raised millions from investors before abandoning the projects, and the investors held the bag. The indictment also alleges that Hay and Mayo harassed a project manager at Fes NFT who exposed their fraudulent activities.
If convicted, Hay and Mayo each face up to 20 years in prison on the conspiracy and wire fraud counts, with a maximum sentence of five years in prison.
“Every time a new investment trend emerges, fraudsters are sure to follow it,” U.S. Attorney Martin Estrada said in a statement. “My office and our law enforcement partners will continue our efforts to protect consumers and punish criminals involved in crypto fraud.”
The case was investigated by Homeland Security Investigations, a division of the Department of Homeland Security that has the authority to investigate and combat a variety of financial crimes, including digital assets. Assisted by the National Cryptocurrency Enforcement Team, a special division of the DOJ.
Edited by Andrew Hayward.
Daily Debrief Newspaper
Start every day with top news stories, plus original features, podcasts, videos and more.
