A District judge in Brooklyn, United States, has made a pace-setting ruling with revolutionary implications as regards the Initial Coin Offering (ICO) market. Judge Raymond Dearie of the U.S. District Court Eastern District of New York today declared a judgment stating that U.S. securities are prevalent over the sale of token in ICOs.
This decision was made in a suit against Maksim Zaslavskiy; an alleged fraudulent ICO promoter who is being prosecuted for fraud related offenses as he reportedly defrauded innocent investors of over $300,000 from an ICO fraud known as REcoin.
The REcoin ICO Fraud
Towards Q4 of last year, it was reported that the US SEC slammed Zaslavskiy and his company with a suit regarding a fraudulent ICO, scamming several investors through a couple of ICO scams including REcoin. The accused stated through his crypto startup REcoin stating the investors are assured by diamond assets and real estate which does not exist, this in itself amounts to a fraudulent misrepresentation.
Though Zaslavskiy’s lawyer argued, ousting the jurisdiction of the court on the grounds that the ICO which is a subject matter in this case, are currencies as opposed to securities which the SEC Act provides for. The judge refused to dismiss the case against the defendant stating that ICOs would be regarded as securities for the purpose of federal criminal law.
Effect of Dearie’s Ruling on ICO Market
The ruling by judge Dearie is a landmark in the legal stratosphere as it might be placing the ICOs within the jurisdiction of securities watchdog and it might create a precedent for other related cases in future to follow. An excerpt from Judge Dearie’s ruling states:
“Zaslavskiy’s contrary characterizations are plainly insufficient to bypass regulatory and criminal enforcement of the securities laws. Because the indictment is sufficient under the Constitution and the Federal Rules of Criminal Procedure, and because the law under which Zaslavskiy is charged is not unconstitutionally vague as applied, Zaslavskiy’s motion is denied. The case will proceed to trial.”
Despite the fact that the position of the judge is helping the prosecutor’s case, it is still dependent on the jury, but the defendant’s lawyer can still decide to challenge the jurisdiction of securities law before the jury, judge Dearie noted.