Ethereum and Solana NFT Scammers Charged in $22 Million Rug Pull Scheme

Two California men have been charged with orchestrating a series of NFT rug pulls that totaled more than $22 million bilked from buyers, the U.S. Department of Justice said in an indictment unsealed on Friday. The DOJ said the case is the largest NFT scheme it’s ever prosecuted.

Gabriel Hay of Beverly Hills, and Gavin Mayo 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. 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 associate director of Homeland Security Investigations said, in a statement. “Such technological fraud schemes cost investors millions of dollars every year.”

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

A rug pull occurs when a developer creates a token, falsely claims there are plans for future development, sells the token based on these empty promises, and then abruptly vanishes with the investors’ money.

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

According to the DOJ, the duo and others falsely claimed the Vault of Gems NFT collection would be tied to real-world assets like jewelry, and similarly made claims around other projects that were never fulfilled.

Hay and Mayo allegedly collected 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 from the Faceless NFT, who had exposed their fraudulent activities.

If convicted, Hay and Mayo 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.

“Whenever a new investment trend occurs, 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 wrongdoers involved in crypto fraud.”

The case was investigated by Homeland Security Investigations, a division of the Department of Homeland Security that has a mandate to investigate and combat various forms of financial crimes, including those involving digital assets. It was assisted by the National Cryptocurrency Enforcement Team, a special unit of the DOJ.

Edited by Andrew Hayward