Hi everyone. This breaking news article will cover the SEC's announcement that they are filing charges against two fraudulent ICOs, namely REcoin and DRC. This continues the SEC's initiative to monitor ICOs outlined in this article. Let's begin!

Fraudulent ICOs Discovered

RECoin and Diamond Reserve Club (DRC) were the ICOs charged, and they were both created by someone named "Maksim Zaslavskiy." Let's dive into each ICO, and see what made the ICOs frauds:

RECoin: A Real Estate-Backed Coin

RECoin's backing was promised to be real estate assets bought by ICO funds. Founder Maksim Zaslavskiy boasted about his team of "lawyers, professionals, brokers and accountants" who would initiate the trades and purchase the assets, however nobody was hired by Zaslavskiy, and the team did not exist.

Additionally, he greatly inflated the numbers behind his ICO. His ICO was estimated to have raised about $300,000, however he told investors it had raised $2-4 million. Both of these lies led to the SEC labeling RECoin as a fraud.

DRC: A Diamond-Backed Coin

DRC, or Diamond Reserve Club's ICO fraud was very similar to that of RECoin. Zaslavskiy told investors that his company had lucrative deals with diamond traders/sellers bringing him large discounts when buying diamonds. He told ICO investors they would make profits off of diamond arbitrage. (Arbitrage is when you buy assets at a low price from one seller/exchange and sell them at a higher price at another seller/exchange, or vice-versa. This makes use of the differences/variations between exchanges.)

Just like RECoin, these deals had not been made; DRC had not done business with any diamond sellers, and the coin was not backed. The exact amount investors lost when investing in DRC is not known, but is estimated to be quite high.

SEC Shows Seriousness Regarding ICOs

The SEC's recent warnings regarding fraudulent usage of cryptocurrencies and ICOs has now been met with hard evidence that the SEC is serious about this. The SEC's statement regarding these ICOs is shown below:

Investors should be wary of companies touting ICOs as a way to generate outsized returns. As alleged in our complaint, Zaslavskiy lured investors with false promises of sizeable returns from novel technology.
—SEC

The SEC is currently in the process of obtaining court orders and charges to bar Zaslavskiy from directing any future ICOs and freeze his assets. They are also working on repaying investors.

Lastly, it seems the SEC is using Zaslavskiy's scam as a message to all perpetrators of ICO scams and frauds to think again. The SEC isn't kidding about ICOs, and they'll do what they can to discover and charge those behind scams.

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