A Beverly Hills man is facing six counts of cryptocurrency crimes, which resulted in investors losing over $22 million worth of cryptocurrency.
The 23-year-old Gabriel Hay allegedly connived with another fellow – Gavin Mayo of Thousand Oaks, also 23 years of age, to perpetrate a scheme that defrauded investors of their monies. This represents one of the many cases where cryptocurrency and other digital assets are used to perpetrate crime.
The duo committed several digital asset crimes
According to the Beverly Press, the duo faces one count of conspiracy to commit wire fraud, two counts of wire fraud, and one count of stalking. Following investigations, authorities in Beverly Hills revealed that the duo tricked investors by using a series of digital asset project “rug pulls.”
“Rugpulls” is reportedly a fraud scheme in which the perpetrators create a non-fungible token (NFT) or other digital assets and ask investors to invest in it before abruptly abandoning the project.
US Attorney Martin Estrada said this trend was inevitable, but also vowed his office and other law enforcers would intensify efforts to protect the unsuspecting consumers as well as punish the perpetrators of crypto fraud.
“Whenever a new investment trend occurs, scammers are sure to follow.”
Estrada.
These criminal activities also surface spurred by new technologies that enable digital asset criminals to flourish in defrauding unsuspecting consumers. According to principal deputy attorney general Nicole M. Argentieri, head of the Justice Department’s Criminal Division, Hay and Mayo fleeced investors in digital asset projects “of tens of millions of dollars.”
The duo also allegedly threatened one individual for attempting to expose them to their fraudulent schemes.
“Fraudsters take advantage of new technologies and financial products to steal investors’ hard-earned money. The department is committed to protecting investors and will continue to work with our law enforcement partners to root out fraud involving cryptocurrency and other digital assets and bring offenders to justice,” explained Argentieri.
The Beverly Hills man and his colleague each face up to 20 years in jail
According to authorities, Hay and Mayo each face up to 20 years in jail on conspiracy and wire fraud counts. They also face a maximum of five years each on the stalking count.
It is alleged that between May 2021 and May 2024, the duo sponsored several NFT and other digital asset projects and made false statements regarding the projects.
The court documents show that Hay and Mayo also provided false and misleading “roadmaps” that detailed all the plans for the NFTs after their launch, which they had never intended to accomplish.
In one instance, the indictment alleges that the duo made false claims while promoting the Vault of Gems NFT project, which they said was the “first NFT project pegged to a hard asset.”
Hay and Mayo then abandoned the Vault of Gems and other projects they had presented, as opposed to pursuing them. They had collected millions of dollars from investors.
According to the court papers, Hay, Mayo, and others allegedly used the tactics with other digital asset projects, including Vault of Gems, Sinful Souls, Clout Coin, Faceless, Dirty Dogs, Uncovered, MoonPortal, Squiggles and Roost Coin.
It is also alleged that Hay and Mayo used several methods to cover up their involvement in the fraudulent projects. However, a project manager on the Faceless NFT project exposed the duo of their involvement. Hay and Mayo then started harassing the project manager and his parents, sending them intimidating messages.
“Using NFTs to commit fraud not only exploits emerging technology but also erodes trust in the broader digital ecosystem.”
Homeland Security Investigations Special Agent in Charge Michael McCarthy.
He added that while Hay and Mayo’s criminal activities might not involve violence, they reflect the profound harm these schemes caused to the investors who were defrauded of millions of dollars.
Hay and Mayo’s case is not unique, as there has been an increase in cryptocurrency scams and other cybercrimes worldwide. Russia is reportedly one of the biggest victims of cybercrimes and suffered over 40 million data breaches during the first quarter of 2022 alone.
In Oceania, Australia is the biggest victim, while Nigeria is at the top of cybercrimes in Africa, according to studies. According to AAG, it is estimated that the average cost of a cyber breach was about $4,35 million in 2022 and predicted the global economy will incur about $10.5 trillion due to cybercrime costs compared to $7 trillion in 2022.
Reports also show that criminals increasingly target cryptocurrencies and other digital assets when executing cybercrimes. Earlier this year, the US government sanctioned two crypto exchanges – Cryptex and PM2BTC- for allegedly facilitating the laundering of cryptocurrencies obtained through cybercrime.
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