The FBI arrested Steven Nerayoff, a US lawyer known for his work on advising ICOs, including the Canadian ICO Ethereum, yesterday and he was charged with extortion by the DoJ in the Eastern District of New York.
According to a complaint unsealed yesterday, Nerayoff is alleged to have threatened to destroy a company launching an ICO in Seattle if they did not pay him millions of dollars.
Nerayoff was retained by the company to assist it to launch an ICO for commission of 22.5% of all funds raised and 22.5% of all of the coins issued pursuant to the ICO. Just before the ICO was to launch, Nerayoff allegedly told his client it would have to pay him almost double the commission (equal to $8.75 million back then) or he would destroy the company and sabotage the ICO.
The client paid the additional funds. Nerayoff did not perform additional legal or other services for the increased commission.
Nerayoff introduced a guy named Michael Hlady to the company who alleged he was a member of the secret service and had taken down a head of state. Subsequently, they both allegedly threatened the company with its destruction unless they paid them more money. Hlady was associated with Alchemist.
Part of the alleged extortion involved a course of conduct whereby Nerayoff and Hlady undertook searches to find out the name and location of the child of one of the startup’s founders who was a woman and looked up her previous employment history and let her know that they had that information; then they asked for large sums of money including an incident where Hlady allegedly woke the woman co-founder up from sleep one night to tell her that if the startup did not give him $10 million, he would destroy her and harm her company.
Nerayoff runs a Blockchain company called Alchemist which allegedly advises the Toronto ICO called AION. The bio of Nerayoff says he created the concept of ICOs, and says that he co-owns CasperLabs, a proof of stake startup, through a parent company.
Nerayoff has other Canadian connections besides Ethereum and AION – he says he is the chairman of a TSXV listed company called Global Blockchain (now Global Gaming) Technologies, a reporting issuer in British Columbia. In its investor disclosure, it promised investors that their investment would be used to make Global Blockchain Technologies become the SWIFT of Blockchain, which has not yet happened. Here Global Blockchain is pumped as the “world’s first publicly traded stock that invests in top-tier Blockchain and digital currency innovations.” And Nerayoff also says he is an advisor for the ICO of Toronto-based Polymath; the latter confirms he is their advisor. Polymath represented that Nerayoff is the co-founder of Ethereum.
Global Blockchain Technologies, in its public disclosure documents, disclosed that it paid US$2 million to Kodak to buy all of the pre-ICO Kodak coins in 2018, and owns 12.8% of Toronto based Hyperion Crypto Exchange Inc., which it says is licensed by the SEC. It also disclosed that it invested $5 million into Hyperion Crypto Exchange Inc., and that the Exchange was launching in association with a major government.
Hyperion Crypto Exchange Inc. appears to be the same entity as Hyperion Technologies, also based in Toronto. The CEO is the same and its CFO was the CFO of Global Blockchain Technologies. According to this article, Hyperion acquired assets from the Canadian ICO company Vanbex, which like Nerayoff, also was hired by Polymath in connection with its ICO in Canada. In August 2018, Hyperion (the exchange entity) said it was licensed in the US as an ATS (alternative trading system) and had a positive relationship with the OSC. Entities registered with the SEC as an ATS are here – Hyperion does not appear to be on the list.
Recently, Polymath and Nerayoff joined forces on an Alchemist accelerator to advise Blockchain startups, and Nerayoff is listed as a key advisor with many other Toronto-based Blockchain related companies, many of whom appeared with him at a Canadian ICO Conference held in 2018, below, in which Nerayoff was featured.
In the video, below, on YouTube, Nerayoff is interviewed at a Canadian organized Polymath sponsored event, in which he describes his role as an inventor of what he calls “token ICOs” and promotes Polymath’s ICO.
The Canadian ICO Conference organizer posted Nerayoff’s photo on social media at the event with the following words: “The SEC tried to spook the market with subpoenas – don’t let big brother get you down – the truth shall prevail!”