Maksim Zaslavskiy, a computer programmer from Brooklyn and the first person in the United States to be convicted of running a fraudulent initial coin offering (ICO) has been sentenced to a year and a half behind bars.

As Law360 reported on Nov. 18, the Brooklyn businessman received a prison sentence of 18 months for running two scam ICO’s, both of which were advertised as being backed by collateral — diamonds and real estate, respectively — that did not exist. Zaslavskiy pleaded guilty in November 2018 to conspiracy to commit securities fraud.

More than 1,000 investors duped

Zaslavskiy made it seem as if the ICO was led by experienced real estate professionals, backed by United States property investments, luring in more than 1,000 investors who invested at least $300,000 in the scam ICO during the summer of 2017. Richard P. Donoghue, U.S. attorney for the Eastern District of New York, said in a statement:

"Zaslavskiy committed an old-fashioned fraud camouflaged as cutting-edge technology. [...] This office will continue to investigate and prosecute those who defraud investors, whether involving traditional securities or virtual currency."

According to Crain’s New York Business, Zaslavskiy’s attorney, Mildred Whalen of the Federal Defenders of New York, had argued to federal Judge Raymond Dearie that Zaslavskiy attempt to refund the duped investors. However, PayPal reportedly froze his accounts over concerns that ICO payments were made with stolen or fraudulent credit cards.

When Zaslavskiy told the federal Judge that “at no point I am a thief,” Dearie replied, “You are a thief. You took something that didn’t belong to you under false pretenses,” adding: