SEC accuses Canadian businessman of $42 million fraud

Key points:

• A 26-year-old Canadian citizen has been accused of creating a scheme through which he raised more than $42 million by promising investors returns through Gray Digital and Gray Fund.
• Gauvin used Discord, fake documents, and false financial data, and spent the funds he raised on payments to previous investors and personal purchases.
• The SEC and FBI are continuing their investigation and seeking the confiscation of profits.

US federal prosecutors have charged a 26-year-old Canadian citizen with organizing a $42 million fraud scheme. According to the investigation, Nathan Gauvin found potential investors through Discord and persuaded them to invest money in Gray Digital Capital Management Inc. and its affiliated Gray Fund.

Source: X.com

Fraudulent schemes and fake investments

As stated in the case file, the man provided false information to a fintech company, which allowed him to take out a loan of nearly $800 000. He then used it for his own expenses, including visits to a private club in London. In the end, he raised over $42 million and used most of the money to pay off previous investors, buy luxury goods, and pay off credit cards.

The US Securities and Exchange Commission (SEC) said that the defendant took advantage of the trust of his online audience and even provided the regulator with falsified materials during the investigation. He was arrested in England this week on a preliminary warrant. At the same time, the SEC filed new charges of securities fraud, and the FBI began searching for possible victims.

How the scheme worked

Investigators claim that from spring 2022 to fall 2024, Gauvin and his accomplices actively attracted people to invest in Gray Digital and Gray Fund, which allegedly combined TradFi and DeFi strategies. He exaggerated returns and claimed that the fund managed tens of millions of dollars in assets, although the actual figures were significantly lower.

In May 2024, he launched another scheme — selling Gray Digital “seed shares” for $30 000 apiece, claiming that the company was worth $60 million and earned more than $12 million a year.

The SEC is seeking the forfeiture of illegally obtained profits, the imposition of penalties, and a ban on further violations. The regulator reminded investors that they should verify information about any investment offers, especially those distributed through social networks and online communities.