U.S. securities law can be used to prosecute fraud cases over cryptocurrency offerings, a New York federal judge ruled on Tuesday in what appeared to be the first court decision to address the issue.

The ruling from U.S. District Judge Raymond Dearie in Brooklyn allows federal prosecutors to pursue their case against Maksim Zaslavskiy.

The Brooklyn resident was arrested in November on charges that he defrauded investors in two cryptocurrencies, violating the federal Securities Exchange Act.

Lawyers for Zaslavskiy did not immediately respond to requests for comment. A spokesman for the office of U.S. Attorney Richard Donoghue, which is prosecuting the case, declined to comment.

Cryptocurrencies, like the well-known Bitcoin, are digital assets that may be treated as currency by their users, though they are not legal tender. So-called “initial coin offerings” soliciting investments in new cryptocurrencies have raised billions of dollars in recent years.

Prosecutors have said that Zaslavskiy last year raised at least $300,000 from investors in a cryptocurrency called REcoin, which he claimed was backed by real estate, and another cryptocurrency called Diamond, which he said was backed by diamonds.

In fact, prosecutors said, no real estate or diamonds backed the virtual currencies.

In March, Zaslavskiy’s lawyers asked Dearie to dismiss the charges, arguing that REcoin and Diamond were currencies, not securities, and therefore not covered by the Securities Exchange Act.

– By Brendan Pierson, Reuters, 11 September 2018.

Link to Reuters.

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