Federal Judge Rules Cryptocurrency Falls Under Securities Law

U.S. securities law can be used to prosecute fraud cases over cryptocurrency offerings, a New York federal judge ruled on Tuesday in what appeared to be the first court decision to address the issue.

The ruling from U.S. District Judge Raymond Dearie in Brooklyn allows federal prosecutors to pursue their case against Maksim Zaslavskiy. The Brooklyn resident was arrested in November on charges that he defrauded investors in two cryptocurrencies, violating the federal Securities Exchange Act.

Lawyers for Zaslavskiy did not immediately respond to requests for comment. A spokesman for the office of U.S. Attorney Richard Donoghue, which is prosecuting the case, declined to comment.

Cryptocurrencies, like the well-known Bitcoin, are digital assets that may be treated as currency by their users, though they are not legal tender. So-called “initial coin offerings” soliciting investments in new cryptocurrencies have raised billions of dollars in recent years.

Prosecutors have…