Morgan Stanley Banker’s Brother Stole $300K Through Two Fraudulent ICOs

Bankers have no love lost for Bitcoin and other cryptocurrencies these days. That’s been proven a few dozen times in recent years. However, family members of prominent bankers are entirely different creatures. Maksim Zaslavskiy, the brother of a Morgan Stanley banker, was arrested earlier this week. Apparently, Zaslavskiy had run an illegal cryptocurrency project and defrauded investors for over US$300,000 in the process.

Initial Coin Offerings Remain a big Risk

If there is one trend in the cryptocurrency world to be wary of, it is the initial coin offering hype. Dozens of new projects run ICOs every single month. It is difficult to cull the wheat from the chaff in this regard. Not all projects have honest intentions, and some are even outright scams. It appears Maksim Zaslavskiy has been running a few fraudulent initial coin offerings in recent months. His sole goal was seemingly to defraud investors and get rich in the process.

Those efforts were successful, as Zaslavskiy raised over US$300,000 from investors in the process. Not too long ago, we reported that the SEC had filed fraud charges against two particular initial coin offerings. One project was purportedly “backed” by real estate, whereas the other involved diamonds. It turned out both of those investment opportunities were operated by the same person – Maksim Zaslavskiy. Seeing this investigation yield additional fruit is a big relief, to say the very least.

It is evident initial coin offerings are a very risky market right now. While most people may be concerned about cryptocurrencies in general, these investment opportunities are a much bigger problem that should be regulated sooner rather than later. Governments want to send a clear signal that fraudulent activity cannot be left unpunished when it comes to ICOs. We already know that nearly nine in ten projects will fail despite honest intentions. It is evident there are also far less honest projects out there which are raising a lot of money.

No one will be surprised to learn that both investment schemes operated by Zaslavskiy were flawed. Neither of these investments actually existed, yet over US$300,000 was raised. It is unclear if this money will be returned to investors in the near future, although that remains the best possible outcome. For the time being, Zaslavskiy has been released on bond, though the investigation is far from over.

Misleading investors for criminal purposes is a very serious offense, especially in the United States. While there may not be any official ICO regulation to speak of right now, examples need to be made regardless. As of right now, Zaslavskiy faces up to five years of jail time, which is next to nothing for committing fraud on such a large scale. Then again, without any real regulation in place, it will be very difficult to press for a much longer jail sentence. Only time will tell if such a short sentence will be handed down or not.

This news comes at a very interesting time for cryptocurrency ICOs. More specifically, the SEC recently issued a stern warning not to trust any initial coin offering endorsed by celebrities. It is certainly true anyone promoting such securities will be scrutinized by the SEC in the near future. Given the vast number of people partaking in these sponsored promotions these days, it is evident something will have to change sooner or later. ICOs are a very risky business for both investors and endorsers; that much is rather evident.