He’s making history — and a rap sheet!
A Sheepshead Bay man was sentenced to 18 months imprisonment in Brooklyn Federal Court Monday for what is believed to be the nation’s first conviction for an initial offering fraud featuring cryptocurrency.
Maksim Zaslavskiy raised at least $300,000 from over 1,000 individuals over a three-month period through investments he attained by misrepresenting his new virtual money enterprise, according to court documents.
“Zaslavskiy committed an old-fashioned fraud camouflaged as cutting-edge technology,” said U.S. Attorney Richard P. Donoghue. “This Office will continue to investigate and prosecute those who defraud investors, whether involving traditional securities or virtual currency.”
The 39-year-old was arrested in October 2017 on charges of securities fraud and conspiracy to commit securities fraud for the operation of two initial coin offerings, or ICOs – a strategy often used by startups to raise funds to create a new form of cryptocurrency.
Cryptocurrency – of which Bitcoin is the most well known– is a form of virtual money that has popped up in the past decade and attracted strong investment, especially in 2017 when Zaslavskiy’s crimes were committed.
Zaslavskiy promoted his ICOs by claiming the cryptocurrency he offered was subsidized by reputable financial markets.
His first company – RECoin Group Foundation LLC – first began advertising online around July 2017, where it was claimed to be “the first ever cryptocurrency backed by real estate” markets nationally and internationally with 100 percent of cryptocurrency sales going towards real estate investments.
The Brooklyn computer programmer testified before the Securities Exchange Commission that he nor any of his team ever purchased real estate during the time of the company’s operation, court documents said.
At around the same time as advertisements for RECoin began appearing, prosecutors said the defendant also promoted his second company DRC World Inc., or Diamond, in which an investments was said to open access to an “exclusive and tokenized membership pool” hedged by diamonds.
Zaslavskiy received his sentencing from U.S. District Judge Raymond J. Dearie for the charges he pleaded guilty to last November. The amount of restitution will be determined at a later court date.