26.12.2024
Mikhail Vnuchkov
Author at Traders Union
26.12.2024

$22 million NFT fraud: Prosecutors reveal shocking new details

$22 million NFT fraud: Prosecutors reveal shocking new details the Vault of Gems NFT project

​Gabriel Hay, 23, and his alleged accomplice, Gavin Mayo, also 23, have been charged with defrauding investors out of more than $22 million in a cryptocurrency scheme involving fake digital asset projects. 

Federal prosecutors have brought six counts against the pair, including conspiracy to commit wire fraud, wire fraud, and stalking, according to the Cryptopolitan.

False Promises and “Rug Pulls”

According to court documents, Hay and Mayo lured investors into a series of fraudulent non-fungible token (NFT) and cryptocurrency ventures between May 2021 and May 2024. They are accused of promoting projects with misleading roadmaps and promises of financial returns before abruptly abandoning the ventures, a practice commonly referred to as a “rug pull.”

One of their ventures, the Vault of Gems NFT project, was marketed as the “first NFT project pegged to a hard asset.” However, authorities allege the duo never intended to follow through with their claims and instead pocketed millions from unsuspecting investors. Other projects linked to the scheme include Sinful Souls, Clout Coin, and Squiggles.

Prosecutors also allege that Hay and Mayo harassed a project manager who attempted to expose their fraudulent activities, sending intimidating messages to him and his family.Federal Crackdown on Crypto Fraud

Each defendant faces up to 20 years in prison for conspiracy and wire fraud charges, and an additional five years for stalking. Federal authorities, including the Department of Justice and Homeland Security Investigations, have vowed to intensify efforts to combat cryptocurrency-related crimes.

“Fraudsters exploit emerging technologies to erode trust in the digital ecosystem,” said Special Agent Michael McCarthy, emphasizing the harm these schemes inflict on investors.This case underscores the growing prevalence of cryptocurrency scams and the importance of consumer vigilance in digital investments.

Last week, despite a declining cryptocurrency market, NFT sales surged by 33%, surpassing $302 million. The unexpected rise highlights growing interest in digital assets even amid broader market challenges.

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