Solana and Ethereum NFT Scammers Charged in $22M Rug Pull Scheme
US Prosecutors Charge Two NFT Scammers
On Friday, two California-based men were charged with masterminding several NFT rug pulls that saw investors lose over $22 million. The US Justice Department said the NFT scheme was the largest it had ever prosecuted.
The accused, Gavin Mayo and Gabriel Hay, were charged with conspiracy to commit wire fraud after their arrest in Los Angeles on Thursday. Associate Director of Homeland Security Investigations, Katrina Berger, says the pair have been lying to innocent investors for three years in an effort to fraud them of millions of dollars.
How Did the Accused Execute the Rug Pull?
Hay and Mayo launched their fake NFT projects between May 2021 and May 2024. During that period, they published misleading roadmaps for their NFT collections and made false promises. According to prosecutors, the two deployed their NFTs on Solana and Ethereum. Some of their NFT collections included Faceless, Vault of Gems, Clout Coin, Sinful Souls, Uncovered, Roost Coin, and Squiggles.
The scammers are said to have promised investors that all their NFTs would be redeemable for real-world assets such as Jewelry. However, these promises were not fulfilled. Instead, Mayo and Hay collected more than $22 million from investors and abandoned their projects, especially executing a rug pull.
For starters, rug pulls occur when Web3 developers launch projects, collect money from investors, and then vanish abruptly, leaving investors holding worthless tokens. Billions of dollars have been lost to scammers through rug pulls over the past 12 months. Berger is now advising US investors to research carefully before investing in any crypto project.
NFT Scammers Face a 20-Year Jail Term
Meanwhile, Mayo and Hay could be sentenced to jail for 20 years if found guilty of committing wire fraud. In addition, they risk staying behind bars for five more years if the court finds them guilty of stalking charges.
Following the arrest of the duo, US Attorney Martin Estrada released a statement saying that his office is committed to ensuring all American investors are protected and wrongdoers are punished. Like Berger, Estrada urges investors to do their due diligence before buying any crypto token.
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