A United States district judge from the Eastern District of New York ruled ICOs do fall under the securities law and are under the jurisdiction of the SEC or the Securities and Exchange Commission.
Maksim Zaslavskiy who is the founder of REcoin and under three-count indictment for Securities fraud had moved for dismissal with the argument that cryptocurrencies are not securities. REcoin was a cryptocurrency secured by real estate. Zaslavskiy is charged with making materially false statements in his offering to investors.
The indictment alleges that REcoin had promised to invest in real estate and had a team of lawyers and brokers that were facilitating the real estate transactions. The government prosecutors allege that no real estate was ever purchased and there never was a team of brokers and lawyers.
The denial of the dismissal and the establishment of ICOs as a security is a significant moment in the brief history of cryptocurrencies. Any future cases will be handled by the SEC. It also means that any future ICO in the United States will have to follow SEC rules.
With over 18 Billion raised in ICOs in the past year and a large number of them feared to be fraudulent it could be a busy time for the SEC. There are an estimated 200 ICOs that are under investigation for fraudulent activity in the United States alone.