The Securities and Exchange Commission said Friday that it has charged a businessman and two companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds.
In its complaint, filed in the Eastern District of New York, the SEC alleges that Maksim Zaslavskiy and his companies have been selling unregistered securities, and that the digital tokens or coins being peddled didn’t exist.
This is the first action the agency has brought involving ICOs.
According to the SEC’s complaint, investors in REcoin Group Foundation and DRC World (also known as Diamond Reserve Club) were told they could expect sizable returns from the companies’ operations when neither has any real operations.
What Your Peers Are Reading
From July 2017 to the present, the complaint states, Zaslavskiy, the president and sole owner of the companies, fraudulently raised at least $300,000 from hundreds of investors, through various material misrepresentations and deceptive acts relating to supposed investments in digital “tokens” or “coins” offered, first by REcoin, then by Diamond, during the ICOs.
Zaslavskiy touted REcoin as “The First Ever Cryptocurrency Backed by Real Estate.”
Alleged misstatements to REcoin investors included that the company had a “team of lawyers, professionals, brokers and accountants” that would invest REcoin’s ICO proceeds into real estate when in fact none had been hired or even consulted.
Zaslavskiy and REcoin allegedly misrepresented they had raised between $2 million and $4 million from investors when the actual amount was approximately $300,000.