$22m NFT fraud and harassment campaign lands two Californians in court

Two California men have been charged in the largest NFT fraud case ever prosecuted, accused of defrauding investors of over $22 million through deceptive schemes.

According to a six-count indictment unsealed in Los Angeles, Gabriel Hay, known by aliases such as “Mr. Handz” and “Vaultkeeper,” and Gavin Mayo, known as “Gavinm,” launched fraudulent projects like Vault of Gems and Faceless.

They promised investors lucrative returns using fabricated claims and fake project roadmaps.

Vault of Gems was marketed as the “first NFT project pegged to a hard asset,” with its website falsely claiming the project would enable users to exchange NFTs for physical jewels through a global network of jewelers.

Despite these promises, the defendants abandoned the project after collecting over $1 million in funds, funnelling the proceeds into their personal accounts.

The indictment also details how the pair used aliases and hired others to conceal their involvement in the schemes.

When a whistleblower linked them to the Faceless project, Hay and Mayo launched a harassment campaign, sending messages threatening the individual and their family.

The indictment states that their actions “caused substantial emotional distress” to the whistleblower, including emails falsely purporting to be from a law firm that threatened legal action and made explicit threats against the individual’s parents.

Hay and Mayo face charges of conspiracy to commit wire fraud, wire fraud, and stalking, which carry maximum sentences of over 60 years if convicted.

This case comes amid renewed interest in NFTs, with surging prices for blue-chip collections like CryptoPunks and Bored Ape Yacht Club.

Just two weeks ago, authorities shut down 40 fraudulent NFT minting domains targeting artists across the US.

Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at [email protected].