The Securities and Exchange Commission alleges that a type of “cryptocurrency” called REcoin touted for real estate is a fraud and was designed to dupe investors out of money.
Cryptocurrency is a “digital or virtual currency that uses cryptography for security.” The most famous example is Bitcoin, which has been used in real estate transactions.
The REcoin Group launched REcoin in July with an “initial coin offering,” which is the first offering of its digital currency. It touted REcoin as the “first ever cryptocurrency backed by real estate.”
The company said REcoin was a “new, proprietary cryptocurrency designed for a broad range of financial transactions.” It claimed it was backed by “real estate held by 101REcoin Trust in countries with a developed and stable economy, such as the U.S., Canada, Japan, Great Britain, and Switzerland.”
As reported by HousingWire, SEC announced last week that it charged REcoin and the company’s founder, Maksim Zaslavskiy, with defrauding investors by selling unregistered securities and selling digital tokens or coins that didn’t really exist. SEC’s complaint states that the REcoin Group does not have any real operations in place. After the company launched, it had announced plans to run several “partner platforms” for investors, including an online platform for auctions for the sale and lease of real estate; a service for finding and offering real estate services; a news site dedicated to real estate; a classified ads platform designed specifically for real estate professionals; and an online platform for crowdfunding in real estate, according to the SEC complaint.
“Investors should be wary of companies touting ICOs as a way to generate outsized returns,” Andrew Calamari, director of the SEC’s New York regional office, told HousingWire. “As alleged in our complaint, Zaslavskiy lured investors with false promises of sizeable returns from novel technology.”
Source: “SEC Says ‘First Ever Cryptocurrency Backed by Real Estate’ Is a Fraud,” HousingWire (Oct. 2, 2017)