Los Angeles, CA – December 22, 2024 – Two California men were arrested yesterday after being charged in a six-count indictment for defrauding investors of more than $22 million through a series of fraudulent cryptocurrency projects. Gabriel Hay, 23, of Beverly Hills, and Gavin Mayo, 23, of Thousand Oaks, are accused of using “rug pull” schemes to deceive investors into funding nonfungible token (NFT) and digital asset projects, only for the creators to abandon the projects and pocket the funds.
The indictment, unsealed today in federal court, details how the two men ran multiple NFT and digital asset schemes between May 2021 and May 2024. The charges stem from their involvement in projects such as Vault of Gems and Faceless, among others. “Rug pulls” refer to a type of fraud in which project creators solicit funds from investors for a digital asset project, then abruptly abandon the project and steal the invested money.
According to the indictment, Hay and Mayo falsely promoted Vault of Gems as an innovative NFT project that would be the “first NFT project to be pegged to a hard asset” such as jewelry. The project’s website claimed that it would create a marketplace for users to exchange NFTs for hard assets by partnering with jewelers around the world. The men allegedly raised over $1 million in cryptocurrency by offering Vault of Gems NFTs to the public in late September 2021.
However, after raising the funds, Hay and Mayo abandoned the project, transferring significant amounts of cryptocurrency to their personal wallets. Court documents show that between September 21 and September 22, 2021, Hay received approximately 269 Ether (valued at around $500,000) from the Vault of Gems project.
The indictment also accuses Hay of using various social media platforms to promote the fraudulent project, including registering a TikTok account for Vault of Gems and posting misleading videos about its success. By November 2021, the project was abandoned entirely, leaving investors with worthless NFTs and no recourse.
Faceless NFT Project
Hay and Mayo allegedly repeated this scheme with their Faceless NFT project. They created misleading promotional materials and falsely claimed that the project would release a comic book series, a movie, and even launch a clothing brand. On November 19, 2021, the Faceless NFTs were made available for minting on the Solana blockchain, raising over $420,000 in cryptocurrency. The men again abandoned the project shortly thereafter, with the funds disappearing into their personal accounts.
In one instance, when a project manager on the Faceless project became suspicious of the defendants’ involvement, Hay and Mayo allegedly launched a harassment campaign against the manager and his family, sending threatening messages to intimidate them into silence.
In addition to the fraud charges, the indictment also includes allegations of stalking. After a project manager attempted to expose the pair’s role in the Faceless NFT scam, Hay and Mayo are accused of sending messages to the manager and his family with the intent to intimidate and distress them. This harassment tactic is said to have continued through various means of communication, adding a personal layer of retaliation to their fraudulent activities.
Investigators believe that Hay and Mayo were involved in other digital asset fraud schemes beyond Vault of Gems and Faceless, including projects such as Sinful Souls, Clout Coin, Dirty Dogs, and Squiggles. The two men also allegedly used third parties to conceal their roles in these projects, even going so far as to falsely identify other individuals as the creators in an effort to avoid detection.
Law Enforcement Response
Homeland Security Investigations (HSI) led the investigation into Hay and Mayo’s activities, with support from other law enforcement agencies. “For three years, Hay and Mayo lied to their investors in order to defraud them out of millions of dollars,” said HSI Executive Associate Director Katrina W. Berger. “Such technological fraud schemes cost investors millions of dollars every year. Just because these crimes aren’t violent does not mean they are victimless.”
Principal Deputy Attorney General Nicole M. Argentieri also emphasized the Department of Justice’s commitment to combating cryptocurrency fraud: “Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money. The department is committed to protecting investors and will continue to work with our law enforcement partners to root out fraud in the digital asset space.”
Hay and Mayo each face charges of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking. If convicted, both men could face a maximum sentence of 20 years in prison for each of the wire fraud and conspiracy counts, and an additional five years for the stalking charge. A federal district court judge will determine sentencing after considering the U.S. Sentencing Guidelines and other factors.
The case is being investigated by HSI Baltimore and prosecuted by the U.S. Attorney’s Office for the Central District of California.
