US Authorities Arrest Two Individuals Demanding Millions For Extortion Of a Crypto Project

Police in the U.S.A detained two people who had supposedly threatened to extinguish a cryptocurrency startup company. They stated that the startup had to pay them millions of dollars in the form of crypto for them to put their plans on hold.

Crypto Startup Extorted

The Eastern District of New York States Attorney Office in collaboration with the Federal Bureau of Investigation released an announcement on September 18, 2019, announcing that it had arrested two individuals: Michael Hlady and Steven Nerayoff. According to the announcement, the two were detained and charged with attempting to extort a crypto startup.

The announcement went on to add that the arrested individuals had already been taken to a federal court for their first appearance. Nerayoff, a licensed lawyer is said to have been retained by a company based in Seattle to assist with its ICO (Initial Coin Offering). He later brought in the second defendant to serve as his operations guy.

Immediately after this, the two are said to have started displaying signs associated with extortion schemes. This was laid bare when they started making demands to be paid millions of dollars in company tokens and information on raised capital. The defendants made the demands yet they had not provided the company with any additional services.

ICO Disruption

The announcement went on to note that the defendants had threatened the CEO of the company that they would disrupt and sabotage the ICO if their demands were not met. Richard P. Donoghue, the U.S Attorney stated that the two accused persons had attempted to carry out an old-fashioned shakedown.

Despite the shakedown being old-school, the defendants insisted on being paid in the form of crypto. The U.S attorney went on to add that the FBI and the U.S Attorney’s office were committed to ensuring that businesses were protected from any form of extortion, regardless of whether the extortionists demanded cryptocurrency or hard cash.

William Sweeney, the Assistant Director of the FBI commented on this extortion scheme adding that it was an old-scheme that had been refined to help give it a more modern twist.

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