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- Prosecutors say Gauvin raised $42M using false claims about Gray Fund assets and returns

- Authorities allege he spent investor money and credit funds on personal expenses

- SEC and FBI pursue fraud charges and seek victims linked to Gray Digital investments

U.S. federal prosecutors have charged Nathan Gauvin, a 26-year-old Canadian national, with orchestrating a multi-year scheme that raised tens of millions of dollars under false pretenses. Court filings state that Gauvin used online channels, including Discord, to convince individuals to commit funds to Gray Digital Capital Management Inc. and various Gray Fund products. Authorities allege that the scheme relied on fabricated claims about investment returns, assets under management, and the operational strength of the business.

According to documents from the U.S. District Court for the Eastern District of New York, Gauvin directed more than $42 million from investors between May 2022 and October 2024. Prosecutors say he misrepresented the Gray Fund's performance, including claims of double-digit monthly returns and more than $78 million in assets, when the actual compounded growth was about 1.4% per month and total assets were significantly lower.

Investigators also detailed an $800,000 line of credit that Gauvin obtained from a fintech lender by supplying false information. Those funds, along with investor contributions, were allegedly used for personal spending, luxury items, and payments to prior participants. Officials say the falsified performance reports and ongoing misstatements helped sustain the operation and support a 2024 "seed stock" offering, which asserted a company valuation of $60 million.

The U.S. Securities and Exchange Commission has filed a parallel civil action, accusing Gauvin of securities fraud. SEC Associate Director Jaime Marinaro said the allegations describe a pattern in which investors were provided fabricated data intended to bolster confidence in the company's activities.

Regulators Seek Victims as Investigations Continue

The FBI has issued a public notice requesting information from individuals who may have provided money to Gray Digital or Gray Fund during the period under investigation. The bureau stated that affected parties could be eligible for certain services and restitution under federal or state law and asked potential victims to contact investigators directly.

Federal authorities allege that Gauvin also promoted a $30,000-per-share sale of Gray Digital stock while claiming the company generated more than $12 million a year in revenue. Prosecutors say these claims were inconsistent with the entity's actual financial position.

Both criminal and civil actions remain ongoing. The SEC is seeking disgorgement, civil penalties, and injunctions, while the FBI continues gathering victim reports as part of the broader inquiry into the alleged $42 million fraud.