--- title: "Crypto-pocalypse Soon-ish? Judge Rules ICOs Are a Security" description: "A federal judge argued today that digital currencies should be regulated like securities, paving the way for tighter regulation of cyprocurrency." date: "2018-09-11" modified: "2018-09-11" authors: - name: "Jon Christian" job_title: "Executive Editor" link: "https://futurism.com/authors/jonc" url: "https://futurism.com/the-byte/judge-icos-securities-law" categories: - "Blockchain" - "Future Society" tags: - "blockchain" - "cryptocurrency" - "sec" - "securities" - "the digest" --- # Crypto-pocalypse Soon-ish? Judge Rules ICOs Are a Security ![A federal judge argued today that digital currencies should be regulated like securities, paving the way for tighter regulation of cyprocurrency.]() *\Image: Adobe Stock/Victor Tangermann\* ## COIN CASE A Brooklyn judge has refused to dismiss a criminal case that would treat an initial coin offering (ICO) as a type of security, *Bloomberg* [reports](). The takeaway: it will empower federal prosecutors who want to crack down on scammers who use digital currencies to circumvent financial law. ## REGULATING INVESTMENTS The case: The Security and Exchange Commission (SEC) is suing Maksim Zaslavskiy, who founded two cryptocurrencies. Prosecutors [say Zaslavskiy misled investors]() by presenting himself as an experienced banker, real estate investor, and philanthropist. A [*Fast Company* investigation]() found that he claimed cryptocurrencies he created were backed up by real estate holdings and diamonds — but prosecutors say they were smoke-and-mirrors scams that defrauded investors for hundreds of thousands of dollars. Zaslavskiy filed a motion to dismiss the case, arguing that his cryptocurrencies couldn't be regulated under securities law. It was an argument, one cryptocurrency [observer tweeted](), that got "dunked on by a judge lucidly and at length." Specifically: if it sounds like a security, walks like a security, and talks like a security, well, maybe it is one. "Congress’ purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called," wrote Raymond Dearie, a U.S. district judge in Brooklyn, in [a memorandum]() issued today. "Stripped of the 21st century jargon, including the Defendant's own characterization of the offered investment opportunities, the challenged Indictment charges a straightforward scam, replete with the common characteristics of many financial frauds." The case, it seems, will [now go to trial](), though it hasn't been scheduled yet. No matter what the court decides in this case, it will probably be appealed because it's in a lower court. But what's interesting, though, is how the judge argued it. It creates an argument that could be used in the future to support the argument that the SEC should get involved in ICOs. And if so, it could be the issuers of ICOs' worst nightmare. **READ MORE:** [U.S. Judge Says Initial Coin Offering Covered by Securities Law]() \[*Bloomberg*\] ***More on regulating cryptocurrency: Blockchain Technology and the Law Aren’t Enemies, They’re Allies*** ## Author I'm responsible for editing, assigning, and scouting at Futurism, as well as occasionally writing for the site. That work involves keeping an eye on a wide range of narratives and issues, but over the past few years I've become increasingly interested in how AI is shaping the future of media, the web, and information itself. My day-to-day often involves collaborating on reporting and commentary projects bylined by my colleagues, but I try to find time to do my own reporting as well; stories I've broken for Futurism have been cited by publications including the New York Times, the Washington Post, the New Yorker, Wired, Ars Technica, New York Magazine, the Columbia Journalism Review, Bloomberg, and more. I grew up in Southern Vermont and attended Vanderbilt University. Prior to Futurism, I contributed to outlets including the Boston Globe, Vice, Wired, Slate, the Atlantic, the Outline, Ars Technica and more, and did stints in farming and food service. I currently live in Brooklyn, New York, and in my free time I enjoy pinball, word games, cycling, running, and music production. ### Author social links [Bluesky]()