REcoin Creator Gets Slapped with 18-Month Sentence for Committing Fraud in Two ICO Tokens
Real estate-focused crypto project, REcoin’s creator, Maksim Zaslavskiy has recently been sentenced to 18 months in prison for conspiracy to commit securities fraud. In addition to the sentence, Zaslavskiy is expected to get a fine from SEC. As put by Attorney, Donoghue, the creator, “committed an old-fashioned fraud camouflaged as cutting-edge technology.”
The case initially took place in 2017, in which a civil complaint was filed. This year, both the SEC and the United States Department of Justice filed an action against the criminal who ran both the REcoin and Diamond Reserve Club (DRC) World initial coin offerings. Since getting caught, he admitted that he tricked 1000 investors.
So how was Zaslavskiy able to achieve this? Turns out the REcoin was advertised as a token that reflects real estate holdings in developed countries, which is fake. Then comes the DRC, which was said to have been backed by diamonds, another project deemed a scam filled with falsified information.
In addition to the fake claims, Zaslavskiy also lied about having lawyers, brokers, and accountants on his side, all of whom were said to be the ones dealing with the raised funds. Furthermore, the creator overstated how much funds REcoin was able to raise (from the true $300,000 to the falsified $4 million).
As per Hodder's Medium reporting, Zaslavskiy tried to get out of the lawsuit by arguing that the ICOs were currencies and not securities, which means that the government has nothing against him. Second, he debated that the existing securities laws are too broad to be brought as a case. Said claims were dismissed simply because tokens were never distributed as promised.
Interestingly Zaslavskiy’s moves have violated a number of areas of the Howey Test. For instance, the projects at hand involved no form of investment but simply membership sales and second, both projects at hand did not have anything in common to begin with. In particular:
“To allege a common enterprise, the Indictment must establish that “commonality” existed between the investors in REcoin and Diamond.”