A Judge Ruled That Securities Are Covered Under The US Securities Law

A Judge Ruled That Securities Are Covered Under The US Securities Law

A US District Judge made a landmark ruling which allows the US Securities and Exchange Commision to proceed with their legal case against the organizers of two cryptocurrencies.

According to reports, the US Judge, Raymond Dearie ruled that the case against Brooklyn resident Maksim Zaslavskiy can proceed to trial. The prosecutors filed a case against Zaslavskiy for allegedly defrauding investors in two cryptocurrencies reportedly to be backed by real estate and diamonds. Maksim Zaslavskiy and his two accomplices had defrauded investors through a number of ICO scams including REcoin. Prosecutors claim that Zaslavskiy gained a minimum of $300,000 from investors. The prosecutors also added that the tokens were not backed by any real estates or diamonds

The case, which was filled in March, had to take a break after Zaslavskiy and his team of lawyers claimed that cryptocurrencies do not fall under the Securities Exchange Act thus the authorities did not have the legal right to persecute them.

Judge Dearie in his ruling, stated that federal securities laws should be interpreted “flexibly” dismissing a motion from Zaslavskiy’s lawyers to drop the charges.

According to reports, Judge Dearie wrote in a statement:

“The question is whether the ‘elements of a profit-seeking business venture’ are sufficiently alleged in the indictment, such that, if proven at trial, a reasonable jury could conclude that ‘investors provide[d] the capital and share[d] in the earnings and profits; [and] the promoters manage[d], control[ed] and operate[d] the enterprise.’ For present purposes, we conclude that they are.”

The Securities and Exchange Commission started taking actions against ICOs last year due to an increase in fraudulent activities in the cryptocurrency market. Criminals had made a habit of creating a cryptocurrency token and disappear with investors money once they had enough in their pockets. Zaslavskiy was among the first cases that SEC had brought to court the authority had also brought a suit against, Protostar ICO and PlexCorps (for the PlexiCoin ICO).

Reports indicated that this was the first time a ruling of this nature was made in the history of the courts. Authorities count this as a win as it has set a legal precedent for other related cases in the future. Despite being a win, the case still has to go through a trial where  Zaslavskiy and his team of lawyers will have to prove their innocence. The final judgment will be made by the jury to determine whether or not  Zaslavskiy is innocent of the allegations