The Making of the First US ICO Fraud Case

The precedent that will likely shape the body of U.S. case law on fraudulent initial coin offerings is currently being forged in a federal court in the New York borough of Brooklyn, where a 39-year old entrepreneur, Maksim Zaslavskiy, has pleaded guilty to committing securities fraud.

When the SEC first filed a complaint against Zaslavskiy in a federal court in September 2017, it was estimated that REcoin and Diamond Reserve Coin ICOs resulted in around 1,000 investors losing some $300,000.

Having fallen for Zaslavskiy's aggressive marketing campaign, these people were led to believe that they either invested in a digital asset that was backed by real estate located in developed countries, or purchased a tokenized membership in an elite club for wealthy business people, with physical diamonds in the company's custody underlying the value of tokens.

Born in Odessa, Maksim Zaslavskiy was 12 when his family relocated to the U.S. While Maksim was destined to make ICO history, his brother, Dmitry, chose a banking career and later became an executive director for Morgan Stanley.

According to the interview, the 2008 crisis became a major blow for Zaslavskiy's business, further entrenching him in his resentment of the U.S. financial system.

Apparently, the book was meant to lend credibility to Zaslavskiy's claim for intellectual leadership in the crypto space, as its press release presents him as "One of the world's leading currency decentralization proponents." The publicity campaign around the book provides a glimpse into Zaslavskiy's approach to marketing himself and his ventures: bold, extravagant, overblown.

From July through September Zaslavskiy and his accomplices managed to amass around $300,000 before the SEC took the matter to court.

29, 2017, the SEC brought a civil complaint to the U.S. District Court for the Eastern District of New York against Zaslavskiy and his two companies for violating U.S. securities laws.

On Nov. 1, Zaslavskiy was apprehended by FBI agents and criminally charged with a conspiracy to commit securities fraud.

In February, Zaslavskiy's defense filed a motion to dismiss the indictment on the grounds of inappropriate application of securities law to cryptocurrencies.