Former Ethereum advisor Steven Nerayoff and his assistant Michael Hlady have been arrested and charged with extorting millions of dollars in crypto funds.
Nerayoff Facing Jail Time?
The Justice Department has released a statement about the incident, claiming that both men were threatening to “destroy a startup cryptocurrency company if they were not paid millions of dollars” in ether tokens. U.S. Attorney Richard Donoghue explains:
As alleged, Nerayoff and Hlady carried out an old-fashioned shakedown to be paid off with 21st century cryptocurrency.
The company at the center of the duo’s extortion attempts is a Seattle-based enterprise that remains unnamed at press time. The company provides a cryptocurrency rewards program that provides users with crypto depending on how much they utilize the company’s products.
Nerayoff is credited with designing the structure behind Ethereum-based initial coin offerings (ICOs). Interestingly, ICOs have lost a lot of traction in the crypto world as of late given their phony and untrustworthy roots. Many have emerged over the past two years seeking to raise funds for a false company that ultimately disappears halfway through operations with all the money they’ve earned, or close completely, leaving investors with a useless coin, bruised egos and some very empty pockets.
The first extortion attempt from Nerayoff and his assistant is said to have taken place in the summer of 2017. Nerayoff agreed to host an ICO for the company in question in exchange for 22.5 percent of the funds raised. However, he later hit back at the firm, demanding more money than what was originally stated in his contract. He is alleged to have threatened the company into submission, who ultimately gave into his demands and later received no additional work from Nerayoff or his team.
Nerayoff should have quit while he was ahead, but the extortion attempts didn’t end there. Hlady, in charge of operations at Nerayoff’s company, also got in touch with the enterprise, saying that if he didn’t get access to a loan of roughly 10,000 ether tokens, he would do all he could to destroy the company. This occurred in March of 2018. The company gave into these demands as well, but the loan was never repaid.
Don’t You Have Enough Money Already?
The owners of the company allege that they stayed in Nerayoff’s home in New York once when bad whether prevented their traveling back to Seattle. During this time, both Hlady and Nerayoff purportedly entered their rooms and threatened them with violence if they didn’t pay more money.
Nerayoff appeared in court Wednesday and has since been released on bail. Hlady also appeared in court and his been ordered to return for a second appearance. Granted both men are convicted, they could face up to 20 years in prison.
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