Brooklyn Programmer Sentenced for ICO Fraud

Overview of the Case

Maksim Zaslavskiy, a coder from Brooklyn, has made headlines as the first individual in the U.S. to face sentencing for orchestrating a fraudulent initial coin offering (ICO). On November 18, he received an 18-month prison sentence for deceiving over 1,000 investors with two ICOs that falsely claimed to be backed by non-existent diamonds and real estate.

The Scam Unveiled

During the summer of 2017, Zaslavskiy spun a narrative that misled investors into believing they were part of an ICO led by seasoned real estate experts with stakes in legitimate U.S. properties. The lure? Over $300,000 invested in a hopes-and-dreams scheme promising riches through the magic of blockchain—an old-fashioned swindle dressed in the shiny attire of cutting-edge technology.

The Numbers Behind the Fraud

Investors involved: Over 1,000
Total money raised: Approximately $300,000

Tangled in Legal Arguments

As Zaslavskiy embarked on his defense, his attorney, Mildred Whalen, argued that he attempted to refund the scammed investors. However, complications arose when PayPal froze Zaslavskiy’s accounts, suspecting his ICO dealings involved stolen or counterfeit credit cards. This twist illustrates the murky waters surrounding cryptocurrency transactions.

A Judgment Day Reflection

In a rather theatrical exchange during the sentencing, Judge Raymond Dearie told Zaslavskiy, “You are a thief. You took something that didn’t belong to you under false pretenses.” His ruling emphasized the timelessness of deceit regardless of technological advances. As the judge put it, “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.”

Implications for Future ICOs

This case marks a significant accountability moment in the world of virtual currency. U.S. Attorney Richard P. Donoghue reiterated that their office would rigorously pursue fraudulent activities in both traditional and digital investment landscapes, warning would-be fraudsters that there’s no safe harbor: “This office will continue to investigate and prosecute those who defraud investors.”