Another day, more ICO scams. This time is Maksim Zaslavskiy, an ICO organizer that defrauded more than 1000 investors offering them inexistent Initial Coin Offerings. The man pleaded guilty yesterday and could face up to 5 years in prison for this kind of fraud. Also, the man is being indicted by the SEC for civil charges.
ICO Scams Detected
Maksim Zaslavskiy, a man that defrauded more than 1000 investors with two ICO scams, declared himself guilty of fraud and faces up to 5 years in jail. He also faces civil charges that could lead him to pay fines and reimburse investors. The man promoted two false ICO scams that promised investors incredible revenue with false claims.
The man promoted REcoin Group Foundation (REcoin) and Diamond Reserve Club (Diamond). These two were false ICO scams that would be used by him to get easy money from his investors. REcoin was supposedly the first cryptocurrency token that had a backup in real state businesses. Diamond was the first token that had a backup in real, legally certified diamonds.
In fact, according to the reports, the investment certificates delivered to his customers had no validity. Part of his defense was based on the fact that cryptocurrencies were not covered by the Securities law act. So, the trial had no reason. However, the court ruled against it, and stated that:
“simply labeling an investment opportunity as ‘virtual currency’ or ‘cryptocurrency’ does not transform an investment contract—a security—into a currency,” and does not, therefore, remove the offerings from the ambit of securities law.
Same Scams, New Cloaks
The FBI director in charge of the case criticized how old fraudsters are taking advantage of these new technologies to keep scamming people. He stated that Maksim Zaslavskiy
“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.”
The criminal activity of these fraudsters has been on the rise this year, with the amount of ICO and cryptocurrency scam rising dramatically. That is why the SEC (Securities and Exchange Commission) has put cryptocurrency-related and ICO scams as one of their main concernings. They have already gone into attack mode, and last week charged two ICOs of selling unregistered securities.