Two California men face charges for a $22 million cryptocurrency fraud scheme, highlighting the risks associated with investing in digital assets.
In a significant development in the cryptocurrency world, two young men from California have been indicted for allegedly defrauding investors of over $22 million through a series of fraudulent digital asset projects. Gabriel Hay, 23, from Beverly Hills, and Gavin Mayo, 23, from Thousand Oaks, face multiple charges, including conspiracy to commit wire fraud and stalking, as they stand accused of orchestrating a series of so-called "rug pulls" from May 2021 to May 2024.
The indictment, unsealed by federal prosecutors, outlines a troubling pattern of deception where Hay and Mayo created and abandoned various NFT and cryptocurrency projects, misleading investors with false promises. Notable among these projects was the "Vault of Gems NFT," which the defendants claimed would be the first NFT project pegged to a hard asset. Instead of delivering on this promise, they allegedly abandoned the project after collecting millions from unsuspecting investors.
The fraudulent activities reportedly involved the following projects:
According to the indictment, Hay and Mayo misrepresented their involvement in these projects, often using other individuals as fronts to conceal their roles. This tactic was aimed at evading accountability while they pocketed investor funds.
In addition to the financial fraud, the indictment also highlights a disturbing aspect of the case: the defendants allegedly engaged in a harassment campaign against a whistleblower who attempted to expose their fraudulent activities. This intimidation included threats directed at the whistleblower and their family, leading to emotional distress and contributing to the stalking charge.
If convicted, both Hay and Mayo could face severe penalties, including up to 20 years in prison for each count of conspiracy and wire fraud, along with an additional five years for the stalking charge. The case is being prosecuted by the U.S. Attorney’s Office, with investigations led by the Homeland Security Investigations (HSI) Baltimore Field Office.
This indictment is part of a larger trend of increasing cryptocurrency-related crimes. In 2023 alone, Americans reportedly lost over $5.6 billion to crypto fraud, marking a 45% increase from the previous year. While crypto-related crimes account for only 10% of financial fraud complaints, they represent nearly half of all financial losses.
Investment scams, particularly those involving NFTs and cryptocurrencies, have proven to be among the most damaging, causing approximately $4 billion in losses across the U.S. last year. This case serves as a stark reminder for investors to conduct thorough due diligence before engaging in any digital asset projects.
As the cryptocurrency landscape continues to evolve, authorities are ramping up efforts to hold accountable those who exploit the system for personal gain. The U.S. Attorney’s Office has made it clear that they will pursue cases of fraud in the cryptocurrency space to protect investors and ensure that those who engage in illegitimate business practices face justice.
