Man Behind REcoin and Diamond ICOs Pleads Guilty

The person accused in the REcoin ICO fraud has pleaded guilty in court and is likely to be sentenced under securities laws violation.

On Thursday afternoon, Maksim Zaslavskiy charged with running two ICO scams has admitted cheating around 1,000 investors. Zaslavskiy confessed to defrauding investors by promoting the two ICO scams Diamond Reserve Club (Diamond) and REcoin Group Foundation, LLC (REcoin).

“I, along with others, made these false statements to obtain money from investors,” he said.

Blockchain startups leverage ICOs to raise funds for their projects. They generate funding in Ethereum, Bitcoin, and other crypto assets. The ICOs will release native tokens in return for the investors.

Law enforcement authorities and regulators such as the Department of Justice have recently intensified their surveillance of ICOs. The US Securities and Exchange Commission (SEC) has repeatedly stated that the majority of tokens are considered securities and have to comply with federal laws.

The agencies and regulators are cracking down upon businesses that are discovered to be violating the norms.

Zaslavskiy reportedly advertised the REcoin token as backed by real estate in developed nations. He even told the investors that around 2.8 million tokens were already sold.

No properties were bought to back the digital currency, and Zaslavskiy did not even utilize a blockchain to release the fake securitized certificates. “We had not yet purchased any real estate,” he admitted.

The Diamond crypto was also marketed using the same false claims. The accused had not obtained any assets to back the coin.

Zaslavskiy also lied to REcoin investors regarding having a team of accountants, lawyers, and brokers who would invest the money generated into real estate.

When sentenced for committing securities fraud, the accused could face up to five years in prison. The SEC, who slapped Zaslavskiy with civil charges, is also likely to fine him.

“This is a case where he had a good-faith belief in his cryptocurrency products, but he marketed it as further along than what had been actually developed,” his lawyer stated after the court session.

In September, the US District Judge Raymond Dearie had ruled that federal securities fraud laws can cover digital currencies. He added that a jury would determine whether the ICO tokens in every case were securities.