According to Bloomberg News, a US federal judge ruled that two fraudulent criminal cases issued for the first time were subject to securities law.
New York District judge Raymond Dearie ruled on Tuesday that Brooklyn resident Maksim Zaslavskiy’s alleged fraudulent ICO case investigation will continue, dismissing the defendant’s withdrawal motion.
Zaslavskiy was accused of selling tokens for securities fraud. These tokens are said to represent shares in real estate companies and shares in the independent diamond business.
However, the prosecutor said that these companies did not actually purchase the assets invested by the client.
In the motion, Zaslavskiy’s lawyer argued that “the provisions of the securities law are not clear in the prosecution of the accused.”
However, Dearie wrote, “The purpose of Congress’s securities law is to regulate investment, regardless of the form of investment, regardless of its name.”
He also wrote:
“The defendant’s own investment opportunities are all about stealing the concept. This challenged indictment accuses a straightforward scam that has many of the common features of financial fraud cases.”
Therefore, Dearie ruled that the allegations relating to the content of the securities law and the charges against Zalavskiy were not vague.
It is worth noting that Dearie did not specify whether the ICO is a security, but rather that it “can only be justified based on all evidence submitted to the jury during the trial.”
He added, “Zaslavskiy’s main argument is that the investment plan involved does not constitute a security. The term is undoubtedly proved to be a security based on the definition of Howey’s test.”
The judge provided a more detailed information about the Howey test—the American Standards for Determining whether something is a security—may apply to Zaslavskiy’s case, he wrote:
“The question is whether the indictment has fully accused the ‘business incentives for seeking profits’. If confirmed in the trial, the jury can conclude that ‘investors provide capital, share profits and profits; promoters Manage, control and operate the business.'”
“For the current purpose, our conclusions confirm this,” he added.
Having said that, an independent analysis of the Howey test is required at the final trial.
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