The Securities and Exchange Commission has charged a man and two companies for operating fraudulent initial coin offerings.
According to a statement released Friday, the financial watchdog alleges Maksim Zaslavskiy and his two companies, REcoin Group Foundation and DRC World, defrauded investors and sold unregistered securities in two fake ICOs.
REcoin, a blockchain-based real-estate company, and DRC World, a diamond membership club, issued fake tokens to investors and promised high-returns without "real operations," according to the SEC.
ICOs allow startups to raise money by issuing their own cryptocurrencies. Recently, ICOs have come under scrutiny by regulators because companies can use them to raise quick money without having to disclose substantive information to investors.