First US ICO fraud case reaches a head

An American man is facing prison after he pled guilty in the country’s first ever case of fraudulent initial coin offerings.

Maksim Zaslavskiy, who was charged in November of last year with three different charges of securities fraud, submitted his guilty plea last week.

He was accused by the US Department of Justice (or DoJ) of telling untruths to investors in his two ICOs – known as “DRC” and “REcoin”.

The DoJ claimed that Zaslavskiy incorrectly told the investors that DRC was backed up by diamonds, while his REcoin ICO was supposedly backed by property.

Despite his eventual guilty plea, Zaslavskiy, who is 39 years old and was described by the Department of Justice as being a Brooklyn-based businessman, has instructed lawyers to attempt to get the cryptocurrency fraud case thrown out of court over the last year.

In February of this year, for example, his lawyers argued that the ICOs were not securities, and therefore securities fraud could not have taken place.

His lawyers also argued that what they described as the vagueness of securities laws meant that no ordinary person would consider Zaslavskiy’s behaviour to be against the law.

However, the court did not throw the case out.

It is being heard at a US district court in the Eastern District of New York. The guilty plea was given to Judge Ramon E. Reyes, Jr.

The defendant could be given a sentence of anything up to five years in jail. It is understood that he is also facing civil charges levied by the Securities and Exchange Commission (SEC).

After the announcement, a US Attorney covering the case said in a statement that the defendant used “calculated lies”.

“The calculated lies of Zaslavskiy and others led unsuspecting investors who thought they were purchasing cryptocurrency securities to buy worthless certificates”, said Richard P Donoghue, who is US Attorney covering the Eastern District of New York.

“This Office will continue to aggressively prosecute those who exploit and defraud investors, whether through traditional means of securities fraud, or new forms – such as the use of purported cryptocurrency offerings and blockchain technology.”

William F. Sweeney, Jr., the Federal Bureau of Investigation’s (FBI) Assistant Director-in-Charge, also commented: “Criminals who manipulate and defraud the public for their own personal financial gain undermine the stability and security of our investment markets.”

“Investing often involves risk, but nobody should be at risk of being preyed upon by unscrupulous individuals. Zaslavskiy and his associates cloaked old-fashioned criminal schemes in the language of new currency in order to take advantage of investors, and as today’s conviction demonstrates, the FBI will continue to pursue any individual who seeks to profit by exploiting others.”

Lawyers for Zaslavskiy also spoke to the press following his guilty plea: “This is a case where he had a good-faith belief in his cryptocurrency products, but he marketed it as further along than what had been actually developed”, said Mildred Whalen, who was the lead lawyer for the defendant.

Chris Lee

Share

Tweet

Safest Forex Brokers 2023

	Broker	Info	Best In	Customer Satisfaction Score
#1	72% of retail CFD accounts lose money. Founded: 2014	Global Forex & CFD Broker	Best Trading Conditions Visit broker	4.9
#2	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#3	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#4	82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#5	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#6	76% of CFD traders lose money Founded: 2007	Global CFD & FX Broker	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#7	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#8	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.