Initial coin offerings (ICOs) involve the selling of securities and are thus covered by the U.S. Securities and Exchange Commission\u2019s (SEC\u2019s) mandate, a Brooklyn court has ruled. In throwing out defendant Maksim Zaslavskiy\u2019s motion to dismiss fraud charges against him, Judge Raymond Dearie of the New York Eastern District Court wrote, \u201che Exchange Act and SEC Rule 10b-5, under which Zaslavskiy is charged, are not unconstitutionally vague as applied to this case. Zaslavskiy\u2019s motion to dismiss is denied. The case will proceed to trial.\u201d Zaslavskiy had allegedly taken funds from some 1,000 investors with the advertising of \u2018REcoin,\u2019 purportedly backed by real estate, and later, \u2018Diamond,\u2019 which he had claimed was backed by diamonds and agreements with diamond retailers. \u201cIn the end, REcoin investors received no \u2018digital asset, token or coin\u2019 and no REcoin token or coin was ever developed... Zaslavskiy purchased no diamonds. And investors who transferred funds from REcoin to Diamond never received coins or tokens in exchange,\u201d the ruling read. The court cited the \u201cHowey Test,\u201d the ruling of which states that the definition of a security \u201cembodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.\u201d Based on such a definition, the court said, the investment contract between Zaslavskiy and his investors is covered by the SEC. Zaslavskiy had argued that his products were currencies rather than securities, therefore beyond the SEC\u2019s scope. But the court said that Zaslavskiy \u201coverlooks the fact that simply labeling an investment opportunity as \u2018virtual currency\u2019 or \u2018cryptocurrency\u2019 does not transform an investment contract\u2014a security\u2014into a currency.\u201d \u201cStripped of the 21st\u00a0century jargon... the challenged Indictment charges a straightforward scam, replete with the common characteristics of many financial frauds,\u201d the Brooklyn court ruling read. The SEC first reported on Zaslavskiy\u2019s dealings in September 2017. It remains to be seen how the ruling affects cryptocurrencies in general, which are classified by the Commodity Futures Trading Commission (CFTC) as commodities, even though cryptocurrency exchanges need to be registered with the SEC.