"no investments in any sort of real-world asset to back the coins"
Is that not a statement that could apply to all cryptocurrencies? Not snarking, this is a serious question seeking an answer.
A 39 year-old man from New York has been ordered to spend the next 18 months in prison after being convicted of cryptocurrency-based securities fraud. Brooklyn-based Maksim Zaslavskiy was handed the sentence in the New York Eastern US District Court after being convicted on one charge of conspiracy to commit wire fraud. He …
Given that these virtual currencies are all based on some sort of calculation time, any mention of real-world investment securing the value of said coins is obviously bullshit, and a great big red flag to anyone with half a brain.
This guy is obviously a smooth talker. I don't think he'll stop when he gets out - he'll just invent another scam.
Yes, but in this case, you didn't even receive any cryptocurrency in exchange for your real money.
So, the cryptocurrency was a scam. The actual transaction was a scam based on another scam. So scam².
Most of these cryptocurrency scams are cryptocurrency scam²s.
When he gets out?
He probably took a book with him to jail with hidden CellCoin QR codes which are connected to real life (empty) help swag bags on the outside.
A good trading currency if none of the guard have a clue what it is.
That is pretty much true. It is certainly possible for an entity to issue securities that are backed by real assets (such as stock in a corporation with tangible assets), and that could, theoretically, include some real-world asset for backing a cryptocoin, but I wouldn't be looking for a lot of real anything in the cryptocoin market.
As another poster pointed out, cryptocoins can be "mined," so this could introduce issues relating to the number of coins in circulation vs. the value of the "real" assets. Some mechanism would have to exist to limit this, although it happens all the time with many funds which pay investors dividends by giving them more shares of the fund, which can dilute the value of the shares overall.
It is certainly possible for an entity to issue securities that are backed by real assets (such as stock in a corporation with tangible assets), and that could, theoretically, include some real-world asset for backing a cryptocoin
My understanding from the article is that's precisely what Zaslavskiy was promising - that his funds owned sufficient non-cryptocoin assets to guarantee the value of the coins. He wasn't claiming the coins themselves were backed by anything.
For any sensible investor that should raise all sorts of red flags, but obviously sensible investors were not his target audience.
There are days when I think it would be viable to create a fund that invests in obviously fraudulent operations, then cashes out of them (taking Ponzi profits, i.e. bleeding off capital supplied by other, duped investors) before they go bust.
So, he's just pocketing the money and walking. Didn't it occur to him that perhaps the investors might then consider this a fraud and/or theft, and call the cops?
18 months doesn't seem much of a slap though. Perhaps that's what he's relying on?
It'll be interesting to see what the monetary penalty is, and if he ever pays it.
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