US Judge Raymond Dearie rules securities laws apply to cryptos in the latest case involving a Brooklyn resident, Maksim Zaslavskiy. Judge Dearie has stated that the final decision on the case will be made by the jury.
12 September, AtoZ Markets – A New York federal judge has ruled that US securities laws are applicable for prosecuting cryptocurrency fraud allegations. According to some of the online reports, this case appears to be the first in the US to address this matter.
US Judge Rules Securities Laws Apply to Cryptos
The US District Judge Raymond Dearie has ruled that the case against Maksim Zaslavskiy, a Brooklyn resident, can continue. The case alleged that Mr. Zaslavskiy has defrauded investors in two cryptocurrencies that are allegedly backed by diamonds and real estate.
Raymond Dearie has ruled this Tuesday that federal securities laws have to be interpreted “flexibly” in this case. This rejects a motion from the lawyers of Zaslavskiy to drop the changes on the grounds that cryptocurrencies did not fall under the Securities Exchange Act.
Judge Raymond Dearie has reportedly written 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.”
As per online reports, Judge Dearie’s statement and some other filings in the case involving Zaslavskiy did not mention any similar court decisions regarding the application of the federal securities laws to cryptocurrency-related fraud cases.
REcoin and Diamond Cryptocurrencies
Attorneys for Mr. Zaslavskiy reportedly did not provide any details on the case. In addition, online reports state that a spokesman for the office of US Attorney that is dealing with the case, Richard Donoghue, did not comment on the matter as well.
Prosecutors stated that in 2017, Zaslavskiy has gained at least $300,000 from investors for a cryptocurrency that is called REcoin. It is reportedly backed by real estate. Another cryptocurrency is this case is Diamond, which is, as the name suggests, backed by diamonds.
The US prosecutors believe that there was no real estate or diamonds backing the digital assets.
Judge Dearie has stated that the final decision on the case will be made by the jury. He has added that Zaslavskiy’s lawyers will have a chance to make their case in court that the cryptocurrencies should be considered currencies, which could make securities laws not applicable.
Bitcoin is a commodity?
Earlier this year, AtoZ Markets reported another case involving a federal judge ruling that Commodity Futures Trading Commission (CFTC) can regard cryptocurrencies such as Bitcoin as commodities.
The US District Judge Jack Weinstein of Brooklyn has ruled that one of the key US financial markets regulators, the US CFTC, has the rights to bring a fraud lawsuit against New York resident Patrick McDonnell and Coin Drop Markets. Therefore, the case has been approved to go forward.
Mr. Weinstein has also entered a preliminary injunction thus restricting McDonnell and Coin Drop Markets from engaging in commodity transactions.
In fact, one of the CFTC’s key responsibilities is to regulate the commodities, futures and derivatives markets. Back in 2015, the regulatory body has ruled out that virtual currencies are commodities.
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