The U.S. Securities and Exchange Commission has made its first clear statement regarding peddlers of fake digital coins through ICOs.
Per the release, "The SEC alleges that Maksim Zaslavskiy and his companies have been selling unregistered securities and the digital tokens or coins being peddled that don't really exist".
His numbers were "simply not true" according to the SEC's complaint, which noted that the REcoin tokens had never been developed.
As evidence of the claims, the SEC said REcoin's ICO was purportedly meant to raise funds for investing in real estate.
In his pitch Zaslavskiy told investors REcoin ICO proceeds would be directed toward real estate by a team of industry professionals comprised of attorneys, brokers and accountants. Of course, no one had been hired nor even consulted.
The similar process was used for the Diamond Reserve Club where investors were said to purchase memberships in the company. In reality this was a misrepresentation as Zaslavskiy and DRC never actually purchased any diamonds or had any record of business activity, which is odd given the transparent nature of the distributed ledger technology. The report claims that REcoin mispresented the amount that they raised from investors of $2-4 million to an actual amount of $300,000.
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"Investors should be wary of companies touting ICOs as a way to generate outsized returns", said Andrew M. Calamari, Director of the SEC's New York Regional Office. "As alleged in our complaint, Zaslavskiy lured investors with false promises of sizable returns from novel technology".
The SEC recently indicated its intent to crack down on ICOs that are deemed securities but have not filed for an appropriate exemptions. Additionally, the SEC has posted a warning regarding ICOs in general as the sector has been rampant with fraud.
The SEC has obtained an emergency court order to freeze assets belonging to Zaslavskiy and his companies after filing a complaint with a federal district court in Brooklyn, N.Y., charging RECoin and DRC World with violations of anti-fraud and registration provisions of federal securities law.
The complaint seeks permanent injunctions and disgorgement plus interest and penalties. For Zaslavskiy, the SEC also seeks an officer-and-director bar, and a bar to keep him from ever being able to hold an ICO again.
The SEC Complaint is embedded below.
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