Two Americans have been arrested for their alleged role in a series of cryptocurrency extortion of millions of dollars. One of these two is a former consultant for various blockchain projects such as Ethereum.
For millions of extortion
According to a statement from the Department of Justice, former Ethereum adviser Steven Nerayoff and Michael Hlady were arrested after threatening to destroy a start-up. They demanded millions of dollars in ether from the newly baked company.
The statement states that Nerayoff and Hlady have performed an old-fashioned shakedown, but with modern means.
It is important to know that Nerayoff played a major role in the development of ICOs via Ethereum. He claims to be the ICO Architect on his own website.
The court’s statement deals with two extortions to the same Seattle company.
The first extortion
In July 2017, a company was busy setting up an ICO (initial coin offering) to raise funds. The Nerayoff company would advise on this, according to the contracts.
Under that contract, Nerayoff agreed to realize the ICO in exchange for 22.5 percent of all collected ether but also 22.5 percent of issued tokens.
But a few days before the ICO started, Nerayoff is said to have demanded more from the company.
According to the statement, Nerayoff asked that his share be increased by ETH 17,000, compared to the originally agreed ETH 13,000. At the time, it was worth about $ 8.75 million.
Nerayoff is accused of threatening to destroy the company if they fail to meet this requirement. The company paid, but said they didn’t get any services from Nerayoff for this.
The second extortion
The company was then introduced to one of Nerayoff’s employees, Michael Hlady. He was described as the “operations guy.” Hlady said he was part of various government agencies, including the NSA and the CIA. He would also have said that he would have brought down a head of state.
In March 2018, Nerayoff demanded a loan of 10,000 ETH from the company. That was about $ 4.45 million at that time. If he did not receive that loan, he would destroy the company.
The company met that requirement but the loan was never repaid. The charge goes even further.
The prosecutors (ie of the unnamed company) slept in the house of Nerayoff in New York due to bad weather. In the middle of the night, Hlady and Nerayoff entered his bedroom to threaten him to demand more money.
Where are we standing right now?
Nerayoff appeared in court yesterday and was released on bail for $ 750,000. Hlady also attended the trial yesterday and is ordered to appear again next week.
It reads away like an exciting detective, and the accusations are not tender. But Nerayoff and Hlady have not yet been found guilty or innocent. If they are guilty, the duo can get a prison sentence of up to twenty years.
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