• Steven Nerayoff may face 20 years in prison if convicted.
  • He is accused of extorting money from ICO startup.

The US authorities arrested  Steven Nerayoff, an early supporter of Ethereum project and an attorney and founder of blockchain consulting company Alchemist. U.S. law enforcement agency charges Nerayoff of extortion. The FBI also arrested an Alchemist associate Michael Hlady, who was allegedly involved in the scheme.

If convicted, Nerayoff and Hlady may spend the next 20 years in prison.

“As alleged, Nerayoff and Hlady carried out an old-fashioned shakedown, to be paid off with 21st century cryptocurrency.  This Office and our partners at the FBI are committed to protecting businesses from extortion, whether the demands are for U.S. dollars or cryptocurrency,” United States Attorney Donoghue stated.
The authorities emphasised that the defendants exploited an age-old extortion scheme with a modern twist.  

Thus, according to the U.S. Attorney’s Office of the Eastern District of New York, Nerayoff’s firm was hired to promote an initial coin offering (ICO) for a blockchain-based startup for 22.5% of the  cryptocurrency tokens sold during the ICO and 22.5% of all the funds raised by the company. However, right before the ICO he demanded an additional 17 000 ETH otherwise he threatened to ruin the company’s reputation. The founders of the company conceded while the total amount of the fee reached 30 000 ETH.

Meanwhile, a spokesperson for Casper Labs confirmed to CoinDesk that Steven Nerayoff was no longer a member of its team.

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