Anyone who works in the financial industry knows that the regulators who are most vigilant and quick to act are the Americans. Now are given another example of this, as less than three days after announcing its new focus on ICO scams, the SEC has already revealed its first action.
On Friday the regulators charged businessman Maksim Zaslavskiy of defrauding investors in a pair of ICOs supposedly backed by investments in real estate and diamonds. The SEC alleges that Zaslavskiy and his two companies have been selling unregistered securities, and that their tokens don't really exist.
According to the complaint, investors in REcoin Group Foundation and DRC World (Diamond Reserve Club) have been told that they can expect high returns from the companies' investments when in reality they had no real operations.
Alleged misstatements to REcoin investors included that the company had a "team of lawyers, professionals, brokers, and accountants" that would invest REcoin's ICO proceeds into real estate, when in fact none had been hired or even consulted.
Zaslavskiy and REcoin allegedly misrepresented that they had raised between $2 million and $4 million from investors when the actual amount was approximately $300,000.
"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 sizeable returns from novel technology."
The SEC obtained an emergency court order to freeze the assets of Zaslavskiy and his companies. The SEC also seeks to ban Zaslavskiy from participating in any offering of digital securities.
