Maksim Zaslavskiy became the first person in the United States to be convicted of fraud through an ICO.
The Brooklyn businessman was behind two ICO projects in 2017 that proved to be scam. Following allegations made by the SEC, Zaslavskiy was sentenced to 18 months in prison for fraud with secruties.
During ICO glory, he sold tokens for two companies called Diamond Reserve Club World and REcoin Group Foundation. Zaslavskiy managed to raise $ 300,000 for investments in real estate and diamonds, which never materialized.
Investor deception in 2017
The SEC accused him of deceiving investors in September 2017. The businessman's lawyers tried to argue that the securities legislation is very unclear, but their arguments were rejected.
In his statement to the judge, Zaslavskiy said "I'm no thief in any form."
Judge Raymond Dearie contended:
You're a thief. You took something that didn't belong to you for false reasons, "
Adding:
“This is a very unusual case for several reasons. It involves new technologies and new currencies. But there is nothing new about fraud or blatant lies. "
In November 2018, Zaslavskiy pleaded guilty and was subsequently sentenced to 18 months in prison.
"Zaslavskiy committed an old-fashioned fraud, disguised as cutting-edge technology,"
said prosecutor Richard P. Donoghue.
"We will continue to investigate and prosecute those who mislead investors whether they use traditional securities or virtual currency,"
Donoghue said.