Maksim Zaslavskiy asks for sentence of probation in ICO fraud case

Maria Nikolova

At no time, Mr. Zaslavskiy sought to enrich himself by taking investors’ money, his counsel insists.

As the date of sentencing of Maksim Zaslavskiy, who has pleaded guilty to conspiracy to commit securities fraud in connection with two Initial Coin Offerings (ICOs), approaches, the arguments concerning the sentence are on the rise.

On Friday, May 3, 2019, the counsel for Zaslavskiy submitted Sentencing Memorandum at the New York Eastern District Court.

In the document, the defense argues Mr. Zaslavskiy’s total offense level is 9, his criminal history category is I, and his recommended guideline range of imprisonment is from 4 to 10 months. This recommendation falls within Zone B of the sentencing table, and permits the Court to impose a sentence of probation, with a period of home confinement equal to the recommended range of imprisonment. In Mr. Zaslavskiy’s case, this would translate into a sentence of probation with at least 4 months of home confinement.

The defense counsel, however, argues that this is a sentence greater than necessary to achieve the goals of sentencing. The defense requests that the Court impose a sentence of probation without home confinement.

The document makes some interesting statements. For instance:

“Mr. Zaslavskiy exaggerated and made false statements about the state of his project in his efforts to get investors, but his aim was simply that, to get investors and investment, not to steal from or cheat those investors. Mr. Zaslavskiy needed investment to finalize the block chain technology and various soft ware and hard ware platforms that would support the crypto currency. Without a large investor/investment base, Mr. Zaslavskiy could not achieve these goals”.

“At no time, however, did Mr. Zaslavskiy seek to enrich himself by taking investors’ money”, the defense counsel argues in the Sentencing Memorandum.

In November 2018, Zaslavskiy pleaded guilty before United States Magistrate Judge Ramon E. Reyes, Jr. in federal court in Brooklyn to conspiracy to commit securities fraud in connection with two Initial Coin Offerings (ICOs) – REcoin Group Foundation, LLC (REcoin) and DRC World, Inc., also known as Diamond Reserve Club (Diamond).

As he admitted at his guilty plea, Zaslavskiy fraudulently marketed RECoin as “The First Ever Cryptocurrency Backed by Real Estate,” and subsequently touted Diamond as an “exclusive and tokenized membership pool” hedged by diamonds. In fact, Zaslavskiy bought neither real estate nor diamonds, and the certificates he sent to investors were not backed by the promised blockchain technology.

Moreover, Zaslavskiy falsely advertised that REcoin had a “team of lawyers, professionals, brokers and accountants” who would invest the proceeds from the REcoin ICO into real estate, that 2.8 million REcoin tokens had been sold (only about 1,000 investors paid for REcoin tokens) and that the investment in Diamond tokens was “hedged by physical diamonds.”

Zaslavskiy is scheduled to be sentenced on May 20, 2019, at 11:00 a.m.

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