Bogus ICO Perp Faces Possible 5 Years in Jail for RECoin Offer that Did Not Really Exist

Crowdfund Insider reported last month about the RECoin Initial Coin Offering (ICO) that promised tokens backed by real estate that did not really exist. Maksim Zaslavskiy, the alleged mastermind behind a fraud launched from a series of companies including RECoin Group Foundation, DRC World and Diamond Reserve Club, appeared before a federal court last week following an arrest warrant issued by the FBI.  Zaslavsky was reportedly bailed out by his brother who has chosen a slightly different path as he is a managing director at prominent investment bank Morgan Stanley.

The SEC charged Zaslavskiy with attempting to sell unregistered securities by luring investors with “false promises of sizeable returns from novel technology.” But the Feds have taken criminal action in this fraud case and Zaslivskiy is facing up to 5 years in the slammer for pitching the bogus ICO that apparently fleeced gullible investors of around $300,000.

The Warrant document (below) itemizes the securities fraud perpatatred by Zaslivkiy.  From around July 2017 to October 2017, Zaslavskiy offered  offered by tokens by REcoin and Diamond Reserve Club. RECoin said it was using “smart contracts” to invest in real estate for the “first ever” crypto investing in property. Diamond Reserve Club had a slightly different spin pitching an “Initial Membership Offering” that effectively acted like an ICO.

Zaslavskiy promised investors “a range of opportunities,” and “access to more online and offline platforms.” Membership in Diamond was to be tokenized through Diamond Reserve Coin, which was described as being hedged by real diamonds.

Of course all of this was an elaborate ploy to take advantage of the hot ICO market and lure the unsuspecting into the trap. As recently as September Zaslavkiy was promoting his plan on this Bitcoin Forum touting the benefits to anyone real or otherwise who would listen. Zaslasvkiy also was on Reddit sharing his ICO wisdom.

According to Zaslavskiy’s own statements no token or coin for REcoin was ever developed. Not a single investor never received any form of digital asset, token or coin.

This is the first criminal action taken by the feds regarding an ICO and it highlights how easy it can be to disseminate information via social media, forums and press releases without having to prove anything at all. Zaslavskiy only needed a white paper, web site and a good story. While this may be the first, you can rest assure the SEC and other enforcement agencies are looking for other ICOs that are just digital vapor.

 


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  • Jimmy Hughie

    The sad part about it is with this action US have scared a lot of other ICOs from the country, and the majority of them are now diverting huge amounts of resources from the country, which won’t do any good to the well-being of the American citizens in the long run.

    • crowdfundinsider

      The SEC took the first action with the DAO statement – a shot across the bow that told ICO issuers they had to file a securities exemption. The problem with RECoin is it was clearly an act of fraud in the eyes of both the SEC and the FBI. Someone was selling a security that did not exist. It does not matter whether this was a crypto based token, a bond or a share of stock. It is still fraud if the individual is selling something that is bogus and making false statements. ICOs can still “sell” to US investors. They just have to file a Reg D or Reg A+ with the SEC. The difficult part is the question of what is a Utility Token and when is an ICO an actual security. JD

  • Lora Smith

    This is the first criminal action taken by the feds regarding an ICO because really SCAM project not to try are being legal. That is why all ICO out of this and more and more are SCAM. Max try to do his best I feel sorry for him.

    • Emma Green

      Yes, Max Zaslavsky tried to create his own business which requires a considerable amount of time. SEC didn’t give him this time in order to fully reveal the positive aspects of his project. However, even in this difficult situation, all my money that I had invested earlier in the Recoin was returned.The founder really needs support in this matter.

      • crowdfundinsider

        Have you read the filings? He allegedly fabricated everything. It was fake. There was no business. How is this the SECs fault? Everything the SEC and FBI has presented indicates an intent to defraud. IE steal money from other people. His own testimony indicates he made things up. You believe he should be supported in this? JD

  • mrboomer1

    in each article I see different amounts of money. if SEC of U.S. gave more time, then in my opinion the project could be successful

    • crowdfundinsider

      the document alleges he raised “at least $300,000” JD

      • Innessa Liguria

        Is there any information about refunds to investors?

        • crowdfundinsider

          There is not. Typically these things take quite some time. The SEC complaint seeks disgorgement plus interest and penalties. No idea if any money was recovered. JD

    • crowdfundinsider

      also – Zaslavskiy apparently told the SEC that no real estate was ever purchased either before, during or after the ICO. Also – the complaint states that no digital coin was ever developed. Hard to see how more time would have made this successful.

      • Innessa Liguria

        I do like the idea of crypto backed by strong assets such as Bullioncoin LNK GLD Zen etc. Honestly speaking,sad to hear about REcoin crash as it’s idea with real estate was nice as well.Ive heard they were supposed to purchase assets with investors’ money

        • crowdfundinsider

          Conceptually it may be interesting but you should read the SEC filing and the FBI statement. It was all fake, according to them. I feel sorry for the people that invested their money in this. JD

  • Fedor Yuriev

    How exactly is his brother aiding him? But anyway, i dont get why he’d showed his face on their website. Is he that careless?

    • crowdfundinsider

      His brother apparently posted bail to get him out of jail until his trial or they cut a deal. JD