On Sept. 12, 2018, Judge Raymond J. Dearie of the U.S. District Court for the Eastern of New York (EDNY) issued an order finding that a federal indictment adequately pled that Maksim Zaslavskiy promoted digital tokens through initial coin offerings (ICOs) in violation of U.S. securities laws. Judge Dearie applied the Howey test to determine whether the indictment sufficiently alleged that the transactions at issue involved investment contracts, a form of security. He concluded that the indictment was sufficient and denied Zaslavskiy’s motion to dismiss.

This is the second known instance where a federal judge has found that offer or sale of digital tokens can qualify as investment contracts subject to federal securities laws and one of only a few cases that have considered the application of the Howey test to digital assets. The first finding appeared in the June 2018 Report and Recommendation (yet to be adopted by the District Court) of a Florida magistrate judge in a class action lawsuit brought against financial services startup Centra Tech as well as its founders and president.