American financial regulators are investigating allegations that a cryptocurrency fund operated by Sudbury resident Nathan Gauvin defrauded investors out of millions of dollars. Gauvin, who is in his mid-20s, has not been charged but faces scrutiny from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The crypto investment operation, named Gray Digital, is alleged to have been a Ponzi scheme, according to claims from investors spanning the globe. Among them is Liz Whittaker, a UK-based investor, who described the venture as a “very cleanly orchestrated scam.”
“Gray Digital was the crypto Web3-based fund he started,” Whittaker said. “But it was backed up reputationally by the allegedly billion-dollar hedge fund he was running in the real world.”
Whittaker, who invested more than $200,000 in the fund, said she initially received positive returns but encountered issues when attempting a large withdrawal in June. “It never appeared,” she explained. “And nobody’s been able to withdraw anything since.” She now estimates her losses at approximately $110,000.
Henry, an investor from Singapore, reported a $300,000 loss. “It was funds to move my life forward and clear my house and credit debts,” he said. Meanwhile, a Florida-based investor disclosed losing $30,000 from their personal pension.
Telmo Russo, a 34-year-old from Portugal, revealed he and his family invested nearly $150,000, leading to financial strain. “This ended up having a huge impact on my financial life, and worse than mine, I ended up involving family members in Gray Digital,” Russo said.
Francois, a 51-year-old Belgian entrepreneur, claimed losses of over $221,000 alongside his wife and business. “We saw in Gray an opportunity to secure our next 10 years… How naive we were,” he lamented.
According to Whittaker, around 20 high-level investors are now preparing a collective claim, alleging total losses of $8-9 million. However, Whittaker believes the figure could be as high as $20 million.
An intelligence report by Assure DeFi, a security firm in the crypto space, estimated that $8 million in investor funds is currently trapped in the fund. The report suggested that the assets may either be with a third-party intermediary or no longer exist.
Regulatory authorities have subpoenaed Gauvin’s fund partners, and investors have provided evidence to both the SEC and CFTC. Meanwhile, Gauvin has ceased communication, shutting down online platforms and erasing posts on Discord.
While some, like Whittaker, may recover from the financial hit, others face severe repercussions. “I feel so terribly guilty and ashamed for introducing him [a friend] now and am working hard to get justice for him,” she said.
This unfolding investigation serves as a cautionary tale of the risks inherent in crypto investments, as regulators work to hold alleged perpetrators accountable.