We have reported in this space about how the SEC has indicated that most ICOs probably qualify as securities under U.S. law. see 1-3 and 1-23. One of the SEC’s first enforcement actions in this regard was against Maksim Zaslavskiy for his two initial coin offerings allegedly marketed through his companies REcoin and Diamond Reserve Club. That was followed by a criminal suit.
Yesterday, Zaslavskiy sought to dismiss the criminal case, arguing that the cryptocurrencies are not securities. According to his brief, the Howey test is not met because there is no “investment” of money; rather the RECoin and DRC are commodity backed crypto currencies, whose value is supported by purchases of real estate or diamonds, the way the U.S. dollar was once backed by gold. Another Howey factor is not met, the brief argued, because, whereas investors buying stock are signing up to be “passively tied to fortunes of a company,” investors in REcoin and Diamond create value themselves through the ecosystem they form when they buy and use the cryptocurrencies. The SEC said it plans to weigh in on the case.
Author
David Zaslowsky
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David Zaslowsky is partner in the Litigation Department of Baker McKenzie's New York office. He helps companies solve complex commercial disputes in arbitration and litigation, especially those involving cross-border issues and Section 1782 discovery. David has a degree in computer science and, as a result, has worked on numerous technical-related disputes, including, most recently, those involving blockchain and artificial intelligence. In April 2025, Attorney Intel named David one of the top 25 blockchain lawyers in the country. He is the editor of the Firm's blockchain blog and co-editor of the firm's International Litigation & Arbitration Newsletter. David has been included for a number of years in the Chambers USA Guide and Chambers Global Guide for his expertise in international arbitration. He also sits as an arbitrator and is on the roster of arbitrators for a number of arbitral institutions. David sits on the Board and chairs the governance committee of the New York International Arbitration Center, and is a founding member of the International Arbitration Club of New York. For over 35 years, he has written and spoken often on the subjects of arbitration and international litigation.