A Brooklyn federal judge made a decision that could be decisive for the cryptocurrency sector, ruling that SEC rules apply to initial token offerings.
Judge Raymond Dorey made this decision after refusing to dismiss federal charges against fraudster Maxim Zaslavsky, whose lawyers tried to argue that current US laws regarding digital currencies are “ambiguous” and therefore cryptocurrency is not subject to federal securities law. However, Raymond Dorey disagreed and said that a jury would be able to evaluate the alleged cryptocurrency theft under current securities laws.
“Although the term “investment contract” has not been defined by Congress, the question of whether a given financial instrument or transaction is an “investment contract” under the federal securities laws has long been settled.”
Zaslavsky is accused of defrauding investors of more than $300,000. The defendant claimed he was raising funds for two businesses that would allow lenders to buy diamonds or real estate with tokens he called REcoin and Diamond Reserve.
Maxim Zaslavsky, who lives in Brooklyn and whose brother Dmitry is an executive at Morgan Stanley, has pleaded not guilty to securities fraud. If he is convicted, he faces up to 20 years in prison.
According to nypost.com
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