ETHERLive
ETHERLive delivers real-time price and volume data across 16+ exchanges to users in a clear and easy-to-understand package. Users can get up-to-the-second updates for each exchange/currency pair, as well as aggregated market averages for each exchange, currency, and the market as a whole. It also provides a global converted average of all the currency pairs monitored by ETHNews, converted to USD.

---

24hr ---
--%
Tuesday Dec 18th 2018
RESOURCES

The Basics

Learn the basics of Ethereum and various cryptocurrency technologies

Learn More

What is Ethereum?

Understand the underlying principles of the Ethereum Platform

Learn More

The Blockchain

Discover the revolutionizing technology known as the blockchain

Learn More
SUBMIT

Press Release

Submit a press release for consideration on ETHNews

Submit Press

Story / Dapp

Submit a story or DAPP to be considered for publication on ETHNews.

Submit Story

Explanation

Submit "Ethereum Explainer" content for consideration to be featured on ETHNews

Submit Topic
ETHNews Logo
---
--%
Home
News
Etherlive
Ether Price Analysis
Resources
Contact Us

ICO Fraudster Zaslavskiy Pleads Guilty, While Airfox And Paragon Pay SEC Fines

By

Nathan

Graham

WriterETHNews.com

Zaslavskiy could spend up to 37 months in jail. Airfox and Paragon get away with fines.

In September of last year, the SEC filed charges against Maksim Zaslavskiy for attempting to defraud investors in two separate ICOs. Zaslavskiy stood accused of advertising his REcoin as being the first real-estate backed digital currency though no real estate had been purchased to back up his cryptocurrency. In a similar scheme, he claimed to have a digital currency backed by diamonds when neither he nor his associates had purchased any diamonds to back up said token.

During a hearing on Zaslavskiy's motion to dismiss the indictment, which was held in May of this year, Zaslavskiy's lawyer argued that the case should be dismissed on the grounds that securities laws do not apply to ICOs – and even if they did the laws are too unclear and would have no bearing on Zaslavskiy's case.

In response to the defendant's argument, the judge brought up the dual nature of digital currency and inquired if it could be classified as both a commodity and security depending on the nature of the individual case. The judge also said he would have to wait and review how the charges brought against Zaslavskiy relate to the "Howey Test," which is used to determine if an investment product qualifies as a security.

On November 15, Zaslavskiy pled guilty to conspiracy to commit securities fraud.

While Zaslavskiy awaits sentencing, the SEC issued a press release announcing it had settled a case against two different cryptocurrency companies: CarrierEQ Inc. (Airfox), a Boston-based blockchain startup developing mobile applications for earning digital tokens that can be traded for data, and Paragon Coin Inc., which is working on bringing blockchain solutions to the legal cannabis industry.

The SEC claims that both companies failed to register their ICOs and neither one of them qualified for an exemption. The SEC stated, "These are the Commission's first cases imposing civil penalties solely for ICO securities offering registration violations." It felt justified in filing these charges after warning that ICOs could be considered securities offerings in its DAO Report of Investigation.

Both companies have consented to register their tokens as securities, file periodic reports with the SEC for at least one year, pay $250,000 in fines, and compensate investors. Neither company has denied or confirmed any wrongdoing. 

Stephanie Avakian, co-director of the SEC's Enforcement Division, stated, "These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets."


Correction (11/19/2018): An earlier version of this article incorrectly stated that CarrierEQ Inc. and Paragon Coin Inc. were charged with defrauding investors.

Nathan Graham

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

ETHNews is committed to its Editorial Policy

Like what you read? Follow us on Twitter @ETHNews_ to receive the latest Maksim Zaslavskiy, SEC or other Ethereum law and legislation news.