An ICO scammer has become the first person in the US to be jailed for operating a fraudulent ICO. Maksim Zaslavskiy, a computer programmer from Brooklyn, was sentenced to 18 months in jail in a New York court on Monday for claiming that his RECoin and Diamond Reserve Coin projects were backed by real world assets, when in fact they weren’t. Zaslavisky raised some $300,000 for RECoin after lying about the assets the company owned, and after initially attempting to fight the charges he eventually admitted his guilt in November 2018, saving him from a longer sentence.
RECoin and Diamond Reserve Coin Backed by Thin Air
Zaslavskiy launched the RECoin ICO in August 2017 under the banner of “the first ever cryptocurrency backed by real estate”, when in fact like any other scam cryptocurrency it was backed by lies and greed. The SEC shut down the RECoin ICO just a month later alongside Zaslavskiy’s other venture, Diamond Reserve Coin, which, as you may have guessed, was not backed by diamonds. Zaslavskiy was charged with attempting to sell unregistered securities and making misrepresentations to investors, having also claimed RECoin had raised between $2 million and $4 million from investors, when the actual amount was approximately $300,000.
If at First You Don’t Succeed…Plead Guilty
Zaslavskiy attempted to get the charges thrown out in February 2018, claiming that as the tokens were not securities they could not be regulated under securities laws. This is of course an ongoing debate that is subject to its own lawsuit between the SEC and Kik founder Ted Livingston, but back in September 2018 such a debate was yet to really get started. As a result, the US District Court decided that a jury could reasonably conclude that the REC and DRC tokens were advertised as securities and dismissed the motion.
Two months later, Zaslavskiy (or more likely his lawyer) realized that with this ruling his chances of success were as legitimate as his projects, and he pleaded guilty to avoid a lengthier sentence. As it is, he will now serve 18 months behind bars and will forever be remembered as the first person jailed for ICO fraud.