In Common Law systems, it is primarily that the justice is informed in the case of new and previously treated Affairs. The precedent that is likely to characterize the US case-law relating to fraudulent Initial Coin Offerings (ICOs), is currently taking place in Federal court in Brooklyn, New York, where the 39-year-old entrepreneur Maksim Zaslavskiy pleaded guilty to securities fraud declared.
The development, which will most likely lead to a landmark decision -the Jury will find in April 2019, to decide on a punishment – is a further twist to the now 14-month effort of the U.S. Department of justice and the securities and exchange Commission (SEC) are involved . Previously, the process had already led to a destiny of judgment by a Federal judge who had found in September that the value of paper is right on ICO-related cases are applicable.
The case, which will be for the whole of the ICO-world is so important, concerns two companies, the issue is neither a Token nor a Blockchain-powered infrastructure develop: REcoin and Diamond Reserve Coin existed only on paper. However, it is also absolutely makes sense that the authorities amounted to the first three test cases of the ICO addressed, which adds to the learners of private investors the most damage and the industry’s most reputational damage.
When the SEC in September 2017 for the first time in front of a Federal court lawsuit against Zaslavskiy submitted, have cheated the ICOs of REcoin and Diamond Reserve of Coin is estimated at around 1,000 investors and more than 265,000 Euro, will be lost. After they had fallen to the aggressive marketing campaign by Zaslavsky in, they believed that they had invested in the case of REcoin in a digital Asset backed by real estate from industrial countries (REcoin). In the case of the Diamond Reserve Coin investors are thought to have a with a Token provided membership in an Elite Club for wealthy businessmen acquired, the Token should be supported by genuine diamonds.
in fact, they bought, however, “worthless certificates”, as the US Prosecutor Richard Donague on 15. November 2018, said. Zaslavskiy admitted in his confession: “We had not bought any real estate.” Now, he is facing a prison sentence of up to five years. The Supervisory authority does a civil lawsuit against Zaslavskiy.
The career of a swindler
The Ukrainian city of Odessa, overlooking the picturesque coast of the Black sea for its vibrant spirit and unique culture. Throughout the Imperial and Soviet era the city was the seat of a large Jewish community. As the last years of the USSR saw the liberalisation of the immigration policy, many have opted Odessaner Jews to go either to Israel or to the West. The Odessa-born Maksim Zaslavskiy was 12 years old when his family moved. While Maksim was destined to write. ICO-story, chose his brother Dmitry, a career in banking and later managing Director of Morgan Stanley.
The Social Media pages of Zaslavskiy, as well as the Websites of many organizations in which he was at different points in time active, were either deleted or were in the course of the sensational investigation of his activities is not available. The main source of information about his life prior to the court hearing is now the four-hour Interview with the representative of the SEC, which he gave in September 2017. The magazine Fast Company was able to obtain a copy.
In 2003, Zaslavskiy received his degree in Finance from Baruch College, followed by a LLM degree from the Cardozo School of Law of Yeshiva University, and three years later. He worked as an IT consultant for several banks before he started his own international business, the character of the Interview are difficult to derive. Zaslavskiy also claimed that since he was 18. Years in the real estate business to be done, but the investigation of Fast Company could not confirm his employment with the company, for which he had allegedly worked.
The Interview that the 2008 crisis was a severe blow to the business of Zaslavskiy, the anchored its Anger over the US financial system. He turned to charity work and founded a philanthropic organization called Live Love Laugh. To say it is impossible, however, whether the ambitious statements were supported on their site (which is now inactive) ever by actual measures, as the company was apparently never registered properly.
Zaslavskiy has also written at least three books (under the name of Avi Meir Zaslavsky), which are still to be found on Amazon. These are How-to Guides about the specifics of the real estate business. Another, which appeared at the time, as both of his ICOs were in August of 2017, in full swing, explains to the reader that “what you perceive as money and use, is designed in such a way that the economic wealth created is really only of Use for the large banks and multi-national corporations.”
Apparently, the book Zaslavskiys should make a claim to intellectual leadership in the crypto-space is credible, as he is referred to in its press release as “one of the world’s leading proponents of the currency decentralization”. The public campaign around this book shows a small excerpt about how Zaslavskiy wanted himself and his projects covered market: bold, extravagant,. It is not surprising that this style affects the way that both of his ICOs were presented to potential investors.
real estate marker and Initial Membership Offerings
For someone who is not with the traditional financial system as well as with traditional ways to earn money, enthusiastic, offered the ICO onslaught of 2017 countless ways. The beauty of the ICO model was that it opens the world of venture capital, which was previously reserved exclusively for professional investors, each with only a few dollars to spare and a little bit of interest in the unexplored area of Blockchain applications. The downside is that some of the new arrivals were not able to distinguish legitimate projects of real fraud with the red flags.
Megalomaniac language and exaggerated promises are usually telltale signs that something is not right, if the undertaking begins. Zaslavskijs of the projects had both. The June 2017, announced company REcoin presented its founders as a “Real Estate Guru” and stated that the 101REcoin Trust, “management of real estate in developed and stable economies such as the USA, Canada, Japan, the United Kingdom and Switzerland have”, without evidence. In addition, an “international Team of lawyers and programmers to work” supposedly “tirelessly” to zoom in on the assets of the owner. As the court found procedures later, there was no such Team.
In August, the “Entrepreneur, Philanthropist and author Max Zaslavsky” began its marketing campaign for a supposedly diamond-studded digital Asset, the Diamond Reserve Club Token, after he recognized the first hints of the SEC for REcoin. The publication (starting with “If the Scriptures have taught us anything at all…”) was a brand new model for a first-time membership offer (Initial Membership Offering), which should symbolize the participation of investors at a large Ecosystem of interconnected businesses. It is also suggested that the Token could be inherited by the grandchildren of the investors.
You might think that reasonable people would turn up at such a theatrical language and the gigantic representations of the publicly available documents of the two ICOs of the nose. From July to September, succeeded Zaslavskiy and his accomplices, however, to collect more than 265,000 Euro, before the SEC brought the matter before the court.
The consequence
On 29. September 2017 submitted to the SEC in the U.S. district court for the Eastern district of New York a civil action against Zaslavskiy and his two companies for violation of U.S. securities laws. Recoin and DRC responded on their Websites, with a joint statement in which they argued that this is due to a lack of legal clarity with regard to the question of when an ICO or a digital Asset is a security, suggesting that their transactions fall within the jurisdiction of the SEC.
The authorities seemed to be however of a different opinion. On 1. November Zaslavskiy of FBI-agents and charged with solicitation to fraud with securities criminally accused. At the beginning of December he pleaded not guilty and secured a Deposit in the amount of 220,000 euros, which he had deposited in the house of his family in Brooklyn. In February, the defense of Zaslavskiy filed a motion to dismiss the indictment due to improper application of the securities law on crypto-currencies. DoJ Department of Justice (DOJ) and SEC, however, insisted that the Token of REcoin and DRC the Howey-passed Test – a legal Standard that determines whether a contract represents a value of paper.
In September, U.S. district judge Raymond Dearie came to the conclusion that the Token for the purposes of the Case could actually be a time when the securities are treated, which could create a precedent that could affect the future of the ICO regulation. The judge also characterizes unambiguously the nature of the business of Zaslavskiy:
“Without the Jargon of the 21st century. Century, including the own characterization of the offered investment opportunities by the defendant, the contested indictment, a simple fraud, with the typical features of many financial fraud cases is filled.”
