- Extortion charges against an early Ethereum advisor have been dropped
- Steven Nerayoff was one of two accused of extorting a crypto project during its ICO in 2017
- His co-accused, Michael Hlady, pleaded guilty in April
Steven Nerayoff, an early adviser to the Ethereum network, has had criminal extortion charges against him dismissed by a New York, ending a three-and-a-half-year legal battle. Nerayoff and his employee, Michael Hlady, were accused of extorting an unnamed Seattle-based cryptocurrency startup having been hired to provide guidance for the company’s initial coin offering in 2017. According to the prosecutors, the pair allegedly resorted to threats of “destroying” the company unless they were paid millions of dollars. Hlady pleaded guilty and is set to be sentenced, but the charges against Nerayoff were recently dismissed.
FBI Accused of Underhand Tactics
Nerayoff has steadfastly maintained his innocence since the outset of the case, which has included explosive allegations from Nerayoff against those investigating him. In a motion to dismiss the case which was filed in February, Nerayoff’s legal team asserted that he had fallen victim to an intricate scheme orchestrated by the Federal Bureau of Investigation (FBI), which knowingly pursued baseless charges against Nerayoff as a means to coerce him into providing damaging information about his connections within the cryptocurrency industry.
According to his legal team, Nerayoff was forcibly placed into a van and handed a clipboard containing a comprehensive list of prominent figures within the cryptocurrency industry, a list which included notable individuals such as Vitalik Buterin, the founder of Ethereum, and Caitlin Long, the founder and CEO of Custodia Bank. Nerayoff was allegedly instructed by the FBI to provide incriminating information about these individuals in exchange for a reduced sentence and the potential conviction of numerous others.
If this wasn’t enough, Nerayoff’s lawyers also claimed that Hlady was acting as an informant for the FBI, suggesting that Hlady engaged in extensive communication with the investigating FBI agent, exchanging approximately 100 texts and 45 phone calls prior to the arrests of both himself and Nerayoff.
Hlady Pled Guilty
These unusual elements of the case have garnered huge attention within the crypto space and beyond, and they appear to have been given at least some credence given that federal prosecutors moved to drop their case against Nerayoff in March, stating that they had obtained material exculpatory evidence and were otherwise “unable to prove the charges in the Indictment beyond a reasonable doubt.”
Hlady wasn’t so lucky; he pled guilty to extortion just three weeks after the FBI dropped charges against Nerayoff, and faces up to 20 years in prison, showing that there was certainly something afoot with the way the ICO was handled.
