Gabriel Hay, also known as "Mr. Handz," and Gavin Mayo, two Los Angeles-based NFT creators, have been charged with defrauding investors of over $22.4 million through a series of NFT rug pulls and cryptocurrency scams. Operating under pseudonyms and elaborate schemes, the duo lured buyers with false promises of innovative projects and lucrative returns, only to abandon the ventures after collecting funds.
The Scams Behind the Charges
One of the fraudulent projects, "Vault of Gems", falsely claimed to be the first NFT pegged to hard assets like jewelry. The project promised its own exchange, partnerships with jewelers worldwide, and groundbreaking functionality. In reality, these promises were fabrications designed to entice buyers. Hay and Mayo launched the project in September 2021, raising over $1 million in Ether. They abandoned it just weeks later.
Another project, "Faceless", presented a roadmap promising comic books, a movie, a clothing line, and charitable donations. Despite raising over $420,000 in Solana from buyers in November 2021, none of these promises materialized.
Criminal Tactics and Threats
Hay and Mayo not only committed fraud but also engaged in harassment to conceal their activities. They sent threatening messages to individuals who exposed their involvement, even impersonating law firms and making baseless accusations to intimidate whistleblowers.
The indictment outlines charges against Hay and Mayo, including:
- Wire Fraud: Creating and promoting fraudulent NFT projects.
- Stalking: Harassing individuals who uncovered their identities.
- Conspiracy: Collaborating to execute multiple scams.
Their schemes utilized sophisticated tactics, such as hiring third parties to generate artwork and moderate chats and inventing aliases to obscure their true identities. These scams collectively defrauded investors of over $22.4 million. Victims grapple with huge financial losses, highlighting the risks in the unregulated NFT and crypto markets.
This case serves as a stark reminder of the vulnerabilities in the rapidly growing NFT space. While promising innovation, the lack of regulatory oversight allows malicious actors to exploit unsuspecting investors. The charges against Hay and Mayo underscore the importance of due diligence and caution when engaging in crypto and NFT investments.
FAQs
1. What is an NFT rug pull?
An NFT rug pull is a scam where creators launch projects, promise lucrative returns or benefits, and then abandon the project after collecting funds, leaving investors with worthless assets.
2. How much did Gabriel Hay and Gavin Mayo allegedly defraud investors?
The duo is accused of defrauding investors of over $22.4 million through various fraudulent NFT projects and crypto scams.
3. What were some of the fraudulent projects they launched?
Notable scams include "Vault of Gems," which falsely claimed to peg NFTs to hard assets like jewelry, and "Faceless," which promised comic books, movies, and a clothing line.
