NFT Scammer Fined $275,000

NFT Scammer Fined $275,000

NFT

Denver man Tyler Gaye, also known as NFT Machine, has been ordered by a judge to pay a total of $275,000 to the seven investors he had scammed by taking their money and not sending the promised NFTs.

Court Orders Scammer To Refund Victims

Seven investors filed a legal complaint against Tyler Gaye, claiming they had sent him $55,000. Gaye had apparently taken the money, given nothing back, and spent it on NFTs for himself. NFTs or non-fungible tokens are digital collectibles that can be purchased using cryptocurrency and are recorded on the blockchain.

The judge presiding over the case was Denver Circuit Judge David Goldberg, who was forced to declare a default judgment against Tyler Gaye because of his failure to respond to the plaintiffs and the court. A failure to respond usually results in a default judgment, in which the judge grants the plaintiffs the compensation that they demand.

Plaintiffs Granted Default Judgement

According to the default judgment ruling, in this case, Gaye will have to pay approximately $55,000 back to the seven investors. In addition to returning the money that he had allegedly stolen, Gaye will also have to pay an additional $55,000 in damages due to the “reckless disregard” shown by him towards the victims of his fraud. Finally, Gaye has also been ordered to pay a lump sum amount of $165,000 in punitive damages as his misconduct reached the level of civil theft. He will also have to pay for the victims’ legal fees, which have not yet been calculated. Therefore, Gaye has to pay a total amount of $275,000 so far.

The OpeNFT And NFT Machine Saga

Operating under the online alias of NFT Machine, Gaye had allegedly started his ruse with the announcement of OpeNFT, a soon-to-come website for buying and selling NFT art. Claiming that he needed to raise $500,000 for the new website, Gaye announced on the NFT Machine blog that a pre-sale of 37,500 tokens would be available for pre-sale at $13.33 or 0.0074 ETH each. Early investors sent in $500,000 in funds. However, the website was never launched, and the investors never received the promised tokens.

Victims Strung Around For A Year

Attorney Kevin Homiak and the seven victims that he represented explained Gaye’s elaborate ruse. One victim, Tyler Rager, testified,

“I thought Mr. Gaye was honest and I was very excited about the platform he created. It seemed like an exciting platform and protocol at the time because NFTs were definitely on the rise.”

Another victim, Mike Silver, from Los Angeles, lost $7,300 to Gaye. Silver has claimed that he has personally requested a refund but to no avail. However, over the last year, Gaye has been stringing investors around, failing to make good on his promises. Twitter user Shual has listed the entire timeline of the OpeNFT project from its conception till Gaye absconded with the funds.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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