A Brooklyn, New York, man agreed to plead guilty to conspiracy to commit securities fraud in what’s believed to be the first such case involving an initial coin offering -- the rough equivalent of an IPO for digital currencies, according to a person familiar with the matter.

The plea follows a September decision by a judge who ruled the transactions at the heart of the case involved investment contracts and allowed the case to go forward to trial. The ruling and the plea opens the door for the government to go after other cases of fraud in the world of initial coin offerings.

Maksim Zaslavskiy was charged last year with peddling cyber currency offerings backed by non-existent investments in real estate and diamonds.

Zaslavskiy misled investors by marketing the REcoin ICO as a virtual currency that was backed by real estate investments in developed economies and promised investors "the highest potential returns," according to prosecutors in Brooklyn. Later that year he began to advertise a blockchain-based Diamond Reserve Coin, or DRC, which he claimed was a "brand new cryptocurrency" that he said was hedged by physical diamonds.

It was an "old-fashioned fraud dressed in a new-fashioned label," federal regulators said in a lawsuit.

Zaslavskiy’s lawyers argued that securities laws don’t apply to cryptocurrencies and asked the judge to throw the case out.

U.S. District Judge Raymond Dearie handed the government a win when he concluded "Congress’s purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called" and said the indictment "charges a straightforward scam."

While the ruling was focused to the particulars of the case, Dearie said it’d ultimately be up to a jury to decide whether the initial coin offerings at issue were securities.

Earlier this month, prosecutors filed a revised indictment against Zaslavskiy, adding charge of conspiracy to commit wire fraud, which carries a maximum 20-year prison term, to the two counts of securities fraud and conspiracy charges he’d already faced.

He’s set to plead guilty Thursday to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison for making misrepresentations on which investors relied for both the REcoin and DRC schemes, said the person asked not to be identified because the matter isn’t public.

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