SEC Slaps Fraud Charges on Two ICOs Operated by the Same Individual

Everyone in the cryptocurrency world is well aware that the SEC has been investigating initial coin offerings. While no regulatory measures have been announced, the institution recently found two such projects to have been committing fraud. It is possible this number will increase over time, as not every ICO is entirely honest by any means.

SEC Charges Two ICO Projects With Fraud

It is always a possibility that the initial coin offering in which one is interested turns out to be a complete scam. While there are plenty of people with good and honest intentions, the allure of raising millions of dollars can bring out the worst in people as well. With an ICO, there is hardly any way to vet the project itself other than by looking at the whitepaper and the team members. Even that information can be completely bogus, though, which makes the job even harder.

When push comes to shove and the initial coin offering turns out to be fraudulent, there is little action you can undertake. Especially in the US, there is no “safety net” for defrauded investors in the ICO world – at least not yet. That doesn’t mean the SEC isn’t going after those individuals who attempt to defraud investors, though.

Indeed, two such projects have been charged with fraud by the SEC earlier this week. These two projects revolved around diamonds and real estate. While we have seen several cryptocurrency-related real estate ICOs so far, those are seemingly perfectly legitimate. People who invested in either REcoin or DRC World, however, may want to get in touch with officials and see if there is a way for them to get their money back. Both companies are seemingly owned by the same individual, who goes by the name of Maksim Zaslavskiy.

It turns out both of Zaslavskiy’s ICOs are now classified as unregistered securities. Moreover, they don’t even exist in the first place, which makes it a clear effort to defraud investors. All those contributing to these initial coin offerings were promised “significant returns”, although they never received anything in exchange for their investment. Moreover, there was no clear communication about how the invested money would be used. As a result, the US government successfully froze Zaslavskiy’s assets, as well as those belonging to both companies.

It is evident this is just the tip of the iceberg when it comes to initial coin offerings of a fraudulent nature. So many different projects and teams have been trying to raise money and have done so successfully. It is a new bubble that will pop and have catastrophic effects when it does. Legitimate projects will survive, but the rest will simply disappear.

The bigger question is whether or not money will be returned to defrauded investors moving forward. Additionally, Zaslavskiy will have a lot of explaining to do and may face significant jail time for fraudulence. All of this goes to show people need to do their due diligence when looking at ICOs and not blindly invest money they can’t afford to lose. An ICO is not a get-rich-quick scheme in most cases, as legitimate projects take a lot of time to be properly developed.