US Govt seeks 30-37 months’ imprisonment sentence for ICO fraudster Maksim Zaslavskiy

Maria Nikolova

US Government argues that general deterrence is important to send the message not just to Zaslavskiy, but to others like him.

Shortly after Maksim Zaslavskiy, who has pleaded guilty to conspiracy to commit securities fraud in connection with two Initial Coin Offerings (ICOs), asked for a sentence of probation, the US Government has filed its sentencing submission in this case.

In the document, filed earlier today with the New York Eastern District Court, the Government specifies that it seeks a sentence of 30-37 months of imprisonment for Zaslavskiy.

The charges against the defendant stem from a conspiracy to defraud investors and potential investors in connection with two initial coin offerings (ICOs) – Recoin and 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.”

In the document submitted today, the Government argues that a Guidelines sentence of 30-37 months of imprisonment is appropriate because the two fraudulent schemes the defendant carried out were significant in nature and scope. The defendant made blatant misrepresentations to thousands of potential investors and to at least 1,000 individuals who actually invested in Recoin. He promised outsized returns that he never intended to deliver.

Moreover, the Government notes, even after the Securities and Exchange Commission (SEC) interjected in the defendant’s fraud, he tried to transition into a new fraudulent venture – Diamond. While the name of the ICO changed, the misrepresentations as to Diamond were nearly identical to those regarding Recoin.

Zaslavskiy argues that while he “exaggerated and made false statements” about Recoin and Diamond, it was all in an effort to get investors to invest in his venture, not to steal or cheat investors.

According to the Government, Zaslavskiy’s attempted justification for his blatant fraud simply misses the point. First, but for the defendant’s false statements, nearly 1,000 individuals would not have invested in the two ICOs he falsely advertised. Second, the defendant’s claim that he returned money to certain investors after he was contacted by the SEC and made aware of the investigation (less than a month after the presale for Recoin tokens began) indicates nothing more than he was caught and felt he had no other choice.

Furthermore, the Government says, Zaslavskiy did not actually return money to many of his investors. The payment processors that received the money caught the fraud and on their own initiative began to return investor funds.

Notably, companies and individuals are increasingly using ICOs as a way to participate in investment opportunities because the digital assets underlying the ICOs present a new and sometimes efficient means for carrying out financial transactions and because the investments often promise lucrative returns. However, ICOs also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.

The Government argues that general deterrence is especially important in this case to send the message not just to this defendant, but to others like him, who seek to use new technology to engage in old fashioned fraud in the hopes that such fraud will be more difficult to detect.

Read this next

Retail FX

Weekly Roundup: eToro links up with Elon Musk, US crackdown on Russian FX

Let’s take a look back at top stories that dominated the financial markets in our Weekly Round coverage. This week’s digest takes a deep dive into the most recent events and trends within the Forex, Fintech, and cryptocurrency.

blockdag

Must-Watch Top 5 Crypto Picks for Q2 2024 Featuring BlockDAG, Toncoin, Solana and More

Dive into BlockDAG’s meteoric rise and explore other promising altcoins like Pepe, Toncoin, Solana, and Render for superior returns.

Retail FX

Clone of Admiral Markets draws FCA attention

The United Kingdom’s financial markets watchdog today unmasked another fraudulent entity, this time bringing to light a clone firm that has been posing as FCA-‎authorised brand, Admiral Markets UK Ltd.

Digital Assets

Gemini Earn users to recover $2.18 billion in crypto payouts

Cryptocurrency exchange Gemini has agreed to pay $50 million worth of digital assets to investors in its Gemini Earn program as part of a settlement with the New York Attorney General (NYAG), announced on Friday.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: British Pound (GBP) Weakness, US Inflation, Euro, USD June 14 ,2024

British Pound weakens due to lower inflation expectations, potential policy changes from Reform Party, and broader economic concerns.

blockdag

Q2 2024’s Top 5 Cryptos to Buy: BlockDAG, Pepe, Toncoin, Solana and Render

Learn about 2024’s Q2 top 5 cryptos. Explore potential high-return and advancements of altcoins like BlockDAG, Pepe, Toncoin, Solana, and Render.

Fundamental Analysis, Tech and Fundamental, Technical Analysis

GBPCAD Technical Analysis Report 14 June, 2024

GBPCAD currency pair can be expected to fall further toward the next support level 1.7250, former strong resistance from last year.

Digital Assets

Binance acquitted of tax evasion in Nigeria, now faces AML charges

Nigeria has dropped tax evasion charges against two Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, after the world’s largest cryptocurrency exchange appointed a local representative to handle court processes related to the allegations.

Digital Assets

Trezor launches new hardware wallet ‘Safe 5’ with fresh security features

Crypto hardware wallet manufacturer Trezor announced on Friday the launch of its latest flagship product, the Trezor Safe 5, featuring upgraded security to promote self-custody of digital assets.

<