For what the co-founder of Ethereum faces 20 years in prison

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In cryptosuite many ambitious people who are moving technology forward, but some of them have a dark side, which we do not even know. The FBI arrested the co-founder of Ethereum Stephen Marioff and, together with the Prosecutor’s office of the Eastern district of new York was accused of blackmail. ICO project. If found guilty, the entrepreneur who made a huge contribution to the development of the crypto industry, will receive up to 20 years in prison. Than the famous Stephen Marioff what he is accused and why he faces such a long time — read a detailed investigation into DeCenter.

Who is Stephen Marioff

Marioff — big man in cryptosuite, especially known among cryptarithmetic and startups. This is a technical entrepreneur, lawyer and venture capitalist. He founded the company Alchemist, which advises promising blockchain projects and invests money in them. Thus, young startups get the opportunity for the development and successful existence.

Marioff had a hand in the creation of high-end projects and have contributed to the emergence of new technologies used today. He has acted as consultant and/or investor in 200 startups, including 25 on blockchain projects: Ethereum, CasperLabs, tZERO, Lisk, AION and others. Overall, he has developed more than 20 international patents, including a patent for platform CloudParc aimed at creating a smart city the next generation based on Artificial Intelligence and blockchain technology.

On the website the owner said that he invented the concept of utility-tokens on the basis of the ERC20, and was the author of the ICO. Without this person we wouldn’t see gas system and would not have witnessed a record of licensee Ethereum. Besides ICO, Marioff developed the concept of STO, becoming the author of the idea security-tokens on the basis of tZERO from the company Overstock.

That Marioff participated in the creation of the concept of supply of coins was confirmed by the developers of the Ethereum team. However, they noted that the role of businessman was not that key, he says. The title of «architect ICO» assigned to Ariffa also in the press release Overstock, as well as on the portal of TechStars. However, a few days after news about the arrest of his profile with TechStars removed.

In addition, the entrepreneur began to turn away other projects. Representatives CasperLabs said no longer cooperate with Arioform. In the tZERO was given to understand that he was only a consultant on a fee basis in the development of security tokens, and then the relationship with him broke. So, what happened? Why companies don’t want to talk about your investor and consultant? What he is accused U.S. authorities? It turns out that everything happens for a reason, and not alone.

Photo of Stephen Ariffa on Twitter. Source.

The case first

The victim of the entrepreneur became an anonymous ICO-startup from Seattle, in which case it appears as «Company 1» in the head of «John DOE» and «Jane DOE» — as in criminal cases, States are called male and female sides to maintain anonymity. The victim company is focused on smartphone users — creates traffic, attracting visitors to the pages of different companies and paying them their own tokens as a reward for loyalty.

From the claim it becomes clear that Stephen Marioff helped start-UPS not out of kindness, but only on extremely favorable terms. In 2017 the company is the victim began to plan the ICO and concluded with Arioform contract. Under the adopted conditions, the entrepreneur relies 22.5% of all tokens issued by the company, as well as another 22.5% of all collected funds. In return, the businessman promised to help the company in conducting the ICO: counseling start-up, advertising the offer among investors and the media, and generally promote it by any means you deem appropriate.

However, a few days before the start of the ICO Marioff began to demand the leadership of a startup to increase his remuneration to 50% of the amount of the funds raised, without providing any additional services. The businessman wanted to get 30 000 ETH (about $8.75 million at the time), if tokencache will be able to collect 60 000 ETH.

When the leaders of a startup tried to challenge the appropriateness of this proposal, Marioff put forward an ultimatum: «either you agree to my terms, or I destroy your company.» The entrepreneur threatened to sabotage ICO, connect influential people to spread negative information and to do all that startup died, even before birth. The company has agreed. They managed to collect 75 677 ETH, of which 30 000 ETH they paid Neiafu (and then, nearly a quarter of its own tokens). But this case was only a small cut on a large wound. Trouble for anonymous startup is not over — then it became worse.

It second

The blackmail continued six months later, in March 2018, and this time he reached a new level. Stephen Marioff introduced the organizers of the ICO of the company Michael Hlady — «the guy who is responsible for operational work.» He in turn chose to conceal his real name and introduced himself as Michael Peters. From that moment began a new stage of intimidation.

Marioff assured that Michael Hlady has contacts in government agencies and in General he is so influential, respected, and dangerous man that he is not even carrying a concealed weapon into the airport. According to the businessman, informed Glade worked at the national security Agency of the USA, the FBI, and was part of the Irish Republican army. He repeatedly participated in skirmishes and killed people, and once even «removed» the head of state.

On March 21 the head of the Seattle company Jane DOE came to new York for talks to Stephen Neiafu home. There was Michael Hlady. The Blizzard return flight was moved, and the men invited the girl to stay the night. She agreed. The middle of the night Michael Hlady entered the room where she was sleeping Jane DOE, turned on the light and, moving the chair close, sat down beside the bed. He began to swear at her threats, saying that if she will not listen and comply with the requirements, they «crush»: will destroy the company, bring down the price of tokens and will distribute negative information about the project among influential people so widely that the case goes to court.

Later entered the room he Marioff and put forward new requirement — to give him and Hlady loan 10 000 ETH (at the time about $5 million). When she flew home, the leaders of the ICO, the company began to pour threats iMessage — every day more and more aggressive. In particular, the messages to Jane DOE, Hlady said she knew, «he goes to what school her child.» The nerves of the startups failed — a week later they agreed to give a loan of 10 000 ETH, as required Stephen Marioff. Of course, none of this «loan» is not returned and return are not going to.

Cover to one of the interview with Stephen Ariffa. Source.

What’s next?

The growing and incessant blackmail tends to reveal what happened in this case. The company could not stand the constant pressure and contacted authorities. Although protection Marioff fighting for the «cleansing» of his name and insists that civil case had been unfairly qualified as criminal, in their intentions, the FBI determined.

«When a more detailed analysis of this case revealed typical extortionate scheme, but with a modern twist, says the Deputy Director of the FBI William F. Sweeney, Jr. No matter whether it is bitcoin or cash. The FBI will continue to seek justice for the victims that are harassed by these types of fraud.»

Now Stephen Neiafu and his «influential» partner Michael Hlady faces up to 20 years in prison under U.S. law. The case is considered by the Section for combating fraud in the field of business and securities. Responsibility for prosecution rests with the assistants U.S. attorney mark E. Bini and Andrew Spector.

If this whole situation is true, but lawyers Marioff will be able to defend the honor of the businessman and will prove his innocence, then remain only to sympathize with the conditional «Company 1» and the other hostages of circumstances. However, the wine is likely to be proved too serious the court took up the case, and not in vain such confident statements made to the FBI. In addition, the business clearly overstepped the line when he presented Hlady as a government special agent, endangering the reputation of the US authorities. In America is not forgiven.

The matter is widely publicized, and publication of the Prosecutor’s office in new York was even ranked as the best public tweets for September 18. Neiafu and Glade now 48 and 47 respectively — imprisonment for 20 years at that age is comparable to life.

We hope that in the end all will be brought to justice. If it is proved that Marioff slandered, then let his name be cleared, but if we can prove his guilt — let him answer on all severity of the law. No matter how much you have done for the crypto community, if you’re a criminal and a blackmailer who threatens children. Perhaps before us is only the tip of the iceberg, and there are many startups, which received from him the threats but chose to keep his mouth shut.

Situation adversely affects the reputation of our crypto community. Another great crime difficult to be regarded as something positive, but in this case the «barrel of tar» is «spoon of honey». Despite the negative, this case gives cryptologist a sense of security.

What is it? In statements to the FBI about what they are willing to review cases with cryptocurrency fraud with the utmost seriousness — as if it was about cash. First, it kind of suggests that Americans still recognize the cryptocurrency of the money, whatever may be said of the authorities. Secondly, the arrest of a famous person definitely will cool the ardor of many of the same activists, swindlers, remaining in the shadows. It gives hope start-UPS and shows the world that justice in the market of cryptocurrencies — be!

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