ICO scammer Maksim Zaslavskiy to miss 2020 Tokyo Olympics over digital currency fraud
A 39 year-old man from New York has been ordered to spend the next 18 months in prison after being convicted of cryptocurrency-based securities fraud.
Brooklyn-based Maksim Zaslavskiy was handed the sentence in the New York Eastern US District Court after being convicted on one charge of conspiracy to commit wire fraud. He will also have to pay out a monetary penalty yet to be determined by Judge Raymond Dearie.
Zaslavskiy was indicted (PDF) in November of last year for his actions as the owner of Diamond Reserve Club and REcoin Group Foundation, a pair of cryptocurrency investment schemes.
In both cases it was found that Zaslavskiy had marketed and sold cryptocoins on the promise that each was backed by a real-world asset. Those assets were then used to convince investors to buy into the initial coin offering (ICO), on the promise that the value of their coins would be sustained by those real-world holdings.
In the case of RECoin, the currency was touted as having its value backed by real estate holdings that would hold up the worth of the coins, while Diamond Reserve Club was said to be backed by ownership stakes in diamonds.
The offerings were also touted as having the support of “a team of lawyers, professionals, brokers and accountants,” who were all on board. Zaslavskiy even went so far as to create detailed whitepapers for each operation, designed to further make buyers believe their investments would be handled professionally.
In both cases, however, it was found that there were no investments in any sort of real-world asset to back the coins, nor was there any team of professionals dedicated to backing the operation.
Rather, Zaslasvskiy simply pocketed all of the investment money and pulled the plug on the operation before any of the coins were ever issued, leaving buyers with nothing more than a worthless certificate. It was estimated that around 1,000 people lost money in the reCoin scheme, while no estimate was given for the number of Diamond Reserve buyers.
“Zaslavskiy committed an old-fashioned fraud camouflaged as cutting-edge technology,” said US Attorney Richard Donoghue, who lead the prosecution.
“This Office will continue to investigate and prosecute those who defraud investors, whether involving traditional securities or virtual currency.” ®
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