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.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.