The US Securities and Exchange Commission (SEC) has initiated the first in the history of the case of fraud in the initial placement of cryptocurrency (Initial Coin Offering, ICO). The accused are businessman Maxim Zaslavsky and his two companies – Diamond Reserve Club World (DRC World) and REcoin Group Foundation, the regulator said. According to the SEC, they sold unregistered securities and offered investors non-existent tokens or cryptocurrency. Investors were promised a solid return on investment from companies, which, however, did not conduct any activity in principle, the SEC writes.
The regulator froze the assets of Zaslavsky and his companies. They are accused of fraud and violation of the rules of registration of securities. They are threatened with a ban on activities, and they will have to return the money they brought in and pay a fine. Zaslavsky also will not be able to hold senior positions and participate in the placement of digital assets.
Zaslavsky represented REcoin as the first cryptocurrency secured by real estate and assured investors that the company has a staff of lawyers, brokers and accountants who will invest funds raised in ICO in real estate. In fact, no one was hired and no deals were made, although with the help of the ICO the company raised about $ 300,000, writes the SEC. A similar scheme was used by Zaslavsky for DRC World, which was supposed to invest in diamonds and offer discounts to those people who bought the membership in the club, the SEC writes. ICO of the company is still ongoing. Despite investors’ expectations, DRC did not buy any diamonds and was not noticed in any business operations, writes SEC.
“We will fight,” Zaslavsky replied to Anycoin’s industry publication. The SEC accused him of being groundless: the companies simply did not start working, he said. “We did not deceive our investors and offer a full refund to all who want it,” Zaslavsky assured.
The SEC already warned investors about the risks of ICO. At the end of July, she recognized the ToAO draft tokens as securities, which means that their release must be accompanied by appropriate procedures – for example, admission to ICO of only qualified investors and registration.
Asian regulators behaved more rigidly. In early September, China completely banned ICO and ordered companies to return the funds raised. This event shortly crippled the market capitalization of the Cryptocurrency. And in late September, China followed the example of South Korea.