A US District Court Judge in Brooklyn, New York has ruled that sales from initial coin offerings (ICOs) are covered under United States securities laws.

The historic ruling was made by Judge Raymond Dearie in the case against Maksim Zaslavskiy. Zaslavskiy is accused of promoting fraudulent ICOs that misled investors, scamming them out of over $300,000 in total.

Prosecutors say that the Brooklyn resident raised the funds in an initial coin offering for a cryptocurrency called REcoin, which Zaslavskiy claimed was backed by real estate. He is also accused of running a similar scam with a cryptocurrency called Diamond, supposedly backed by the rare, precious gemstones. However, the prosecution says no such real estate or diamonds existed, and therefore the investment vehicles were never properly backed as Zaslavskiy had claimed.

Back in March, the defense claimed that REcoin and Diamond were currencies, not securities, and should not fall under the US Securities Exchange Act. Judge Dearie has now denied the move to dismiss charges, and thus setting a landmark precedent that many other ICOs will be held to.

Dearie also noted that the United States Securities and Exchange Commission (SEC) deems some cryptocurrencies to be securities. The SEC recently clarified that both Bitcoin and Ethereum are not securities as recognized by law, however, clarity is still lacking around the thousands of other altcoins being traded on the cryptocurrency market – many of which that were started via an ICO.

Zaslavskiy’s case will move to trial, but the implications of this ruling will be felt throughout the cryptocurrency landscape for a long time to come as the SEC looks to crack down on ICO issuers illegally issuing securities.

Ethereum, the primary cryptocurrency used to launch and fund ICOs like REcoin, has seen its price reach one-year lows as a result of the news, as ICOs seek to cash out the Ethereum they raised before the effects of this ruling are truly felt.