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SEC charges founder of cryptocurrencies with defrauding investors

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SEC charges founder of cryptocurrencies with defrauding investors

The Securities and Exchange Commission charged the founder of two cryptocurrencies, one backed by real estate and another by diamonds, with allegedly defrauding investors.

The SEC said Maksim Zaslavskiy and his two companies, REcoin Group and DRC World, sold investors unregistered securities and that the digital tokens or coins purportedly underlying them did not really exist.

Zaslavskiy reportedly claimed that REcoin was the first cryptocurrency backed by real estate and that investors could expect "sizeable returns" from the companies' operations when neither company had any actual operations, according to an SEC press release.

In his pitch to prospective investors, the SEC said Zaslavskiy falsely claimed he had raised between $2 million and $4 million from investors for REcoin, when he had actually raised $300,000.

The SEC's complaint also said that Zaslavskiy lied to REcoin investors by claiming the company had a "team of lawyers, professionals, brokers, and accountants that would invest REcoin's ICO proceeds into real estate" when no one had been hired or consulted.

Zaslavskiy also attempted to duplicate his REcoin scheme with DRC World, which claimed to invest in diamonds, the SEC said.

An emergency court order to freeze Zaslavskiy's and his companies' assets was obtained by the SEC. The complaint, filed in U.S. district court in Brooklyn, N.Y., charges Zaslavskiy and the companies with violating anti-fraud and registration provisions of federal securities laws and seeks permanent injunctions and disgorgement, plus interest and penalties.

The SEC is also seeking an officer-and-director bar and a bar from participating in any digital-securities offerings for Zaslavskiy.