Ethereum Supporter Steven Nerayoff Gets Arrested For Extortion

Steven Nerayoff, an early supporter of Ethereum blockchain project and Overstock’s tZero’s former advisor, has been arrested by the U.S law enforcement for extortion. The charges against the official have been announced jointly by the U.S. Attorney for the Eastern District of New York and the FBI’s New York Field Office.

On Wednesday morning, Steven Nerayoff was arrested by the Federal Bureau of Investigation and was subjected to face the charges before a federal court in Brooklyn in the afternoon. The officials also held Alchemist associate, Michael Hlady.

The United States Attorney Office’s for the Eastern District of New York has described the act as “an old-fashioned shakedown” while FBI has named it as “an age-old extortion scheme … with a modern-day twist.” The accused will be subject up to 20 years of imprisonment if convicted of the crime.

Avi Moskowitz, Nerayoff’s attorney, stated that,

A civil dispute has been improperly distorted into a criminal matter. Mr. Neryaoff looks forward to the truth coming out and clearing his name.

As per the government’s complaint, Steven Nerayoff’s company was charged to advise an undisclosed Seattle-based start-up- dubbed as “Company 1” in court documents- in July 2017. The complaint stated that Nerayoff demanded more than the contractually determined Ethereum payout in lieu of his help in the ICO of the firm.

Based on the agreement, Nerayoff was authorized to 22.5 percent of all the cryptocurrency tokens traded off during the ICO along with 22.5 percent of all the funds raised by Company 1 “regardless of the method and manner in which [the funds] are raised.”

The complaint said that Nerayoff demanded an excess of 30,000 ETH through an email sent to the company’s executives, John, and Jane Doe, if the pre-sale and crowd sale crossed 60,000 ETH, in addition to a big allotment of the ICO token of the firm.

On non-fulfillment of his condition, Nerayoff threatened to “sabotage the crowd sale, generate negative press for Company 1 and use his contacts with influential people to ‘destroy’ Company 1.” Company 1 agreed to the payout irrespective of the fact that it failed to receive additional compensating services, reveals the complaint.

Company 1 fetched 55,677 ETH through the pre-sale of the token and an additional of 20,000 ETH during the crowd sale. Nerayoff received 30,000 ETH out of the total of 75,677 ETH received, totaling to about $32 million at that time.

Later, Nerayoff demanded a loan of 10,000 ETH from Company 1 worth $4.45 million and also introduced Hlady to the firm as his “operations guy.”

The court documents read,

Nerayoff claimed Hlady was a former government agent who could carry firearms through airports. On separate occasions, Hlady told Jane Doe… that he had been shot at and had killed people, that he had ‘taken down’ a head of state, and that he had been a part of the Irish Republican Army, the National Security Agency, the Central Intelligence Agency and the FBI.

Nerayoff and Hlady threatened Jane Doe through iMessages and personal warnings. Jane Doe instructed her employee to pay the loan to Nerayoff between March 28 and April 1, 2018. Nerayoff never repaid the loan as per the U.S attorney.

Nerayoff is also a co-founder of Casper Labs; however, since his arrest, his name has been missing from the company’s team page.

A spokesperson of CasperLabs stated that,

“We were unaware of the reported arrest and charges against Mr. Nerayoff until we read the news article ourselves. Mr. Nerayoff no longer holds any positions with CasperLabs.”

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