On Nov 15th, Bloomberg reported that Maksim Zaslavskiy, a 39-year old entrepreneur, has pleaded guilty to committing securities fraud in a federal court in the New York borough of Brooklyn.
The jury is poised to gather in April 2019 to determine a sentence — which will be a 14 month-long process with both the U.S. Department of Justice and Securities and Exchange Commission (SEC) being involved in the decision. Previously, a federal judge had stated in September that securities law is applicable to ICO-related cases.
The case is expected to set an example for the fraudsters in the ICO space. As per the reports, the two ventures in question; REcoin and Diamond Reserve Coin existed on only paper. They neither issued a token nor developed any blockchain-powered infrastructure.
It is estimated that REcoin and Diamond Reserve Coin ICOs have led to 1000 investors being duped of $300,000 in total. Falling to the aggressive marketing campaigns, people were falsely made to believe that they invested in a digital asset backed by real estate located in developed countries or were being given access to an elite club membership of wealthy people, with diamonds in the company’s custody providing value for the tokens.
Turns out, the people were buying “worthless certificates.” In his guilty plea, Zaslavskiy admitted, “We had not yet purchased any real estate.” Zaslavskiy fraud puts him at the risk of up to 5 years in prison, pending the jury’s decision.
Zaslavskiy’s Journey to becoming a fraudster
Maksim Zaslavskiy was born in Odessa. He was 12 when his family shifted to the US. Zaslavskiy also has a brother who chose a banking career and leter become an executive director for Morgan Stanley. On the other hand, Zaslavskiy planned ICO fraud.
During the marketing phase of the ICO, Zaslavskiy’s promoted himself using social media pages and websites of the organizations he ran, but everything was deleted after the fraud investigation began. According to reports, Fast Company has managed to obtain a transcript of the four-hour interview he gave to the SEC representative in September 2019, which is not the only source of his pre-trial life.
Zaslavskiy received a degree in finance from The Baruch College in 2003, which he followed up by an LLM from the Yeshiva University’s Cardozo School of Law. He then worked as an IT consultant for several banks before starting his own international business. He also claims to have been involved in real estate since the age of 18, but verification of his claim has not resulted in fruition.
He has also written three books, one of which was launched when his ICOs were rolled out in August 2017. The book lent credibility to his intellectual leadership claim in the crypto and real estate space.
The fall of Zaslavskiy
Zaslavskiy’s fall began with the SEC bringing a civil complaint to the
U.S. District Court for the Eastern District of New York against both his companies for violating U.S. securities laws. He pleaded not guilty and secured a huge $250,000 bail by leveraging his family’s Brooklyn house. He also filed a motion dismiss the indictment, but it was rejected.
Zaslavskiy story and his sentence will hopefully scare ICO fraudsters and stop future founders from duping people of their money, The decision will have a huge impact on the Crypto and ICO space.