LOS ANGELES
A six-count indictment was unsealed Friday charging two Southern California men with defrauding investors of more than $22 million in cryptocurrency through a series of digital asset project called “rugpulls,” officials stated.
“Rugpulls” are a type of fraud scheme in which the creator of a nonfungible token (NFT) or other digital asset project solicits funds from investors for the project. Then, it’s abruptly abandoned and fraudulently retained in investors’ funds, according to authorities.
Gabriel Hay, 23, of Beverly Hills, and Gavin Mayo, 23, of Thousand Oaks, are each charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking.
Defendants are presumed innocent unless proven guilty.
“For three years, Hay and Mayo allegedly lied to their investors in order to defraud them out of millions of dollars,” said Homeland Security Investigations Executive Associate Director Katrina W. Berger. “Such technological fraud schemes cost investors millions of dollars every year. Just because such crimes aren’t violent does not mean they are victimless. HSI will continue to investigate, disrupt, and dismantle such cryptocurrency fraud networks.”
From May 2021 to May 2024, Hay and Mayo promoted several NFT and digital asset projects, according to court documents. They allegedly made false and misleading statements about these projects and provided deceptive “roadmaps” outlining plans they never intended to carry out.
For instance, the indictment claims that while promoting the Vault of Gems NFT project, Hay and Mayo falsely advertised it as the “first NFT project pegged to a hard asset.” Instead of following through, they allegedly abandoned the projects after collecting millions of dollars from investors.
Hay, Mayo, and others allegedly employed similar tactics with various digital asset projects, including Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin.
They are also accused of concealing their involvement by falsely naming others as the owners of these projects.
When a project manager from the Faceless NFT project exposed their involvement, Hay and Mayo allegedly launched a harassment campaign against him. They are accused of sending or orchestrating messages to intimidate the manager and his family, causing them significant emotional distress.
If convicted, they each face a maximum penalty of 20 years in prison on each of the conspiracy and wire fraud counts and a maximum penalty of five years on the stalking count.
The Homeland Security Investigations Baltimore Field Office is investigating the case.
Assistant U.S. Attorney Maxwell K. Coll of the Cyber and Intellectual Property Crimes Section and Justice Department Trial Attorneys Tian Huang and Tamara Livshiz of the Criminal Division’s Fraud Section, both members of the National Cryptocurrency Enforcement Team (NCET), are prosecuting this case.