Two California men have been accused of orchestrating a series of NFT rug sweeps that totaled more than $22 million stolen from buyers, the US Department of Justice said. He said In the indictment that was unsealed on Friday. The Justice Department said the case is the largest NFT scheme ever prosecuted.

Gabrielle Hay of Beverly Hills and Gavin Mayo of Thousand Oaks were each charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking. The men were arrested Thursday in Los Angeles.

“For three years, Hay and Mayo apparently lied to their investors in order to defraud them out of millions of dollars,” Katrina W. Berger, executive assistant director of Homeland Security Investigations, said in a statement. “These technology fraud schemes cost investors millions of dollars every year.”

From May 2021 to May 2024, Hay – who was dubbed “Mr. The indictment alleged that Handz, Diamondhandz, Centurion, Vaultkeeper, and Mayo, who went by the name “Gavinm,” promoted NFT projects using false claims and misleading project roadmaps.

A Pull the rug This happens when a developer creates a token, falsely claims that there are plans for future development, sells the token based on these empty promises, and then suddenly disappears along with investors' money.

According to the indictment, Hay and Mayo allegedly lured unsuspecting victims with NFT projects that were minted on Ethereum and Solana Blockchains, including Vault of Gems, Faceless, Sinful Souls, Clout Coin, Dirty Dogs, Uncovered, MoonPortal, Squiggles, and Roost Coin.

According to the Department of Justice, the duo and others falsely claimed that the Vault of Gems NFT collection would be tied to real assets such as jewelry, and similarly made claims about other projects that were never implemented.

Hay and Mayo raised millions from investors before abandoning the projects, leaving investors holding the bag, prosecutors said. Additionally, the indictment alleges that Hay and Mayo harassed a project manager of Faceless NFT, who exposed their fraudulent activities.

If convicted, Hay and Mayo each face a maximum sentence of 20 years in prison on both the conspiracy and wire fraud charges, and a maximum sentence of five years on the stalking charge.

“Whenever a new investment trend emerges, scammers are sure to follow,” 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 violators involved in cryptocurrency fraud.”

The case was investigated by Homeland Security Investigations, a division of the Department of Homeland Security charged with investigating and combating various forms of financial crimes, including those involving digital assets. This was assisted by the National Cryptocurrency Enforcement Team, a special unit of the Ministry of Justice.

Modified by Andrew Hayward