Federal criminal charges have been filed against Maksim Zaslavskiy, who federal prosecutors allege lied about the underlying assets when he issued initial coin offerings for two companies, the U.S. Attorney's Office for the Eastern District of New York announced Wednesday.

According to prosecutors in United States v. Zaslavskiy, 17-mj-00934, Zaslavskiy claimed to have issued the first-ever cryptocurrency backed by real estate assets with the launch of RECoin Group Foundation. Later, he created Diamond Reserve Club as a “exclusive and tokenized membership pool” hedged by actual diamond.

The problem, according to prosecutors, is that Zaslavskiy had neither real estate nor diamonds to back his products being touted to investors.

“As alleged, Zaslavskiy and his associates enticed investors by promising returns using novel ICOs even though Zaslavskiy knew that no real estate or diamonds were actually backing the investments,” acting U.S. Attorney Bridget Rohde said in a statement.

The criminal charges come on the heels of parallel charges brought by the U.S. Security and Exchange Commission in late September.

Between July and October 2017, federal officials allege that Zaslavskiy raised at least $300,000 from investors in digital coin offerings in both ventures. The defendant told investors in the real estate business that he was pursuing real estate and development “smart contracts” opportunities, which promise to take the place of third parties such as agents, lenders, inspectors or title insurance providers.

Prosecutors say Zaslavskiy falsely advertised a team of professionals such as lawyers and brokers who would invest the RECoin ICO proceeds into real estate ventures. In fact, none of these people existed, according to the government.

Similarly, investors in Zaslavskiy's diamond hedge were promised physical diamonds backed by their token purchase when none existed.

Zaslavskiy was released on $250,000 bail.

Federal Defenders of New York attorney Mildred Whalen represents Zaslavskiy. She said she would have no comment on the case at this time.

Assistant U.S. Attorney Julia Nestor is prosecuting the case.