A bogus cryptocurrency offering? Securities and Exchange Commission v. REcoin Group Foundation, et al
The U.S. Securities and Exchange Commission charged a New York businessman and his two companies with defrauding investors in a pair of so-called "Initial Coin Offerings" ("ICOs") purportedly backed by investments in real estate and diamonds.Intital Coin Offerings are the take-off on initial public offerings, but for crytpocurrency instead of stock.
The SEC alleged that Maksim Zaslavskiy and his companies sold unregistered securities, and that the digital tokens or coins being peddled didn't exist. The SEC's complaint stated that investors in REcoin Group Foundation and Diamond (also known as Diamond Reserve Club) have been told they could expect sizeable returns from the companies' operations when neither has any real operations.
Zaslavskiy supposedly touted REcoin as "The First Ever Cryptocurrency Backed by Real Estate." Claimed 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 none had been hired or consulted. Zaslavskiy and REcoin allegedly misrepresented they had raised between $2 million and $4 million from investors when the actual amount is approximately $300,000.
There are many legitimate crypto currencey ICOs, and charges such as this, if true, but even if not true, taint the legitimate ICOs by giving cryptocurrency and ICOs a bad name.
ARNOLD F. SOCK, Esquire
ARNOLD F. SOCK is admitted to practice law in the state and federal courts of California