News & Insights

Home » News & Insights » Brooklyn businessman convicted in major cryptocurrency fraud case

Brooklyn businessman convicted in major cryptocurrency fraud case

Bitcoin and Blockchain, Liability, Litigation, NYC, Other

It has been some time since we wrote about cryptocurrencies, but a fascinating case that was resolved today has brought the blockchain back to the top of mind. A cryptocurrency booster named Maksim Zaslavskiy was sentenced to 18 months in prison for an ‘initial coin offering’ scam surrounding the real estate cryptocurrency Recoin. This was the first such criminal prosecution for cryptocurrency fraud, which was also why federal prosecutors pushed for a harsh sentence, referring to the type of fraud committed by Zaslavskiy as “a dime a dozen”. [1]

The evolution of Bitcoin and other cryptocurrencies has been a fascinating one, and during the second major crypto bubble in late 2017 there can be no doubt that countless people involved in cryptocurrencies ran similar frauds to Zaslavskiy, such as the Bitconnect Ponzi scheme of viral internet fame. What makes cryptocurrency a topic of enduring interest rather than another strange bubble in the long annals of financial history (which stretch from the Tulip bubble in the 17th-century Netherlands to the Beanie Baby bubble of the late 1990s) is the fact that experts continue to believe the underlying technology has possible use value for different applications, if not as an alternative currency. In recent months, regulators from around the world have also made clear that Facebook’s Libra, a proposed blockchain-based financial service, will also face intense scrutiny, which in turn led most of Facebook’s partners to pull out. Whichever way blockchain/cryptocurrency evolves, it is perhaps encouraging to see that scams from the 2017 mania are being prosecuted since many amateur investors were fleeced by con artists selling visions of a golden digital future.

[1] Elstein, A. (November 2019) Brooklyn man sentenced in landmark cryptocurrency fraud case from Crain’s https://www.crainsnewyork.com/markets/brooklyn-man-sentenced-landmark-cryptocurrency-fraud-case Accessed November 18 2019

Recent Posts

Impact of Shorter COVID-19 Quarantine on Workplaces

On Monday, the CDC announced changes to its recommended isolation and quarantine time from 10 days to 5 days for asymptomatic people with COVID-19. They recommend that people leaving isolation after 5 days continue to wear a mask for the following 5 days. The CDC also...

Restaurants Sue Over Vaccine Mandate

Restaurant operators sued Mayor Bill de Blasio and New York City over Key to NYC, the new indoor vaccine mandate program, on August 17-the same day the mandate went into effect. A group of restaurants in Staten Island, through the Independent Restaurant Owners...

Financial Regulators’ New Target: Social Media Influencers and SPACs

The Financial Industry Regulatory Authority (“FINRA”) will conduct three new regulatory sweeps in an effort to combat various activities causing extreme fluctuations in the financial markets. FINRA has chosen to target special purpose acquisition companies (“SPACs”),...

Does WARN Apply to Virus Closures?

Enterprise, in Benson et al. v. Enterprise Leasing Co. of Florida LLC et al., has tried to argue that the Worker Adjustment and Retraining Notification Act (“WARN”), through its natural disaster exception, does not apply to closures caused by COVID-19. Two Florida...