A computer programmer from Brooklyn, Maksim Zaslavskiy, who happens to be the first person in the United States to be convicted for running a fraudulent initial coin offering (ICO) has been sentenced to 18 months imprisonment.
According to Law360 on November 18th, Maksim got a prison sentence of 18 months for running two scam ICOs, both of which were advertised as being backed by collateral diamonds and real estate, respectively. Zaslavskiy pleaded guilty in November 2018 to conspiracy to commit securities fraud.
He made it look like the ICO was led by experienced real estate professionals, backed by United States property investments, deceiving more than 1,000 investors who invested at least $300,000 in the scam ICO during the summer of 2017. U.S. attorney for the Eastern District of New York, Richard P. Donoghue, said:
“Zaslavskiy committed an old-fashioned fraud camouflaged as cutting-edge technology. […] This office will continue to investigate and prosecute those who defraud investors, whether involving traditional securities or virtual currency.”
Per Crain’s New York Business, Mildred Whalen of the Federal Defenders of New York, who happens to be Zaslavskiy’s Lawyer, had argued Zaslavskiy attempt to refund the duped investors. PayPal reportedly froze his accounts over suspicion that ICO payments were made with fraudulent credit cards.
Zaslavskiy went on to tell the federal Judge that “at no point I am a thief,” and the Judge replied, “You are a thief. You took something that didn’t belong to you under false pretenses,”. The Judge said:
“This is a very unusual case for a lot of reasons. It involves new technologies and new currencies. But there is nothing new about lying or flagrant fraud.”