Department of Justice charges former tZero paid advisor with extortion

U.S. law enforcement has charged an early supporter of the ethereum project and former paid advisor to Overstock’s tZero with extortion, CoinDesk's Will Foxley reports. Steven Nerayoff, an attorney and founder of blockchain consulting firm Alchemist, was arrested Wednesday morning by the FBI and was scheduled to face charges before a federal court in Brooklyn in the afternoon. The FBI also arrested Michael Hlady, an Alchemist associate.

Nerayoff and Hlady face up to 20 years in prison if convicted of the alleged scheme, described as “an old-fashioned shakedown” by the United States Attorney Office’s for the Eastern District of New York (part of the Department of Justice) and “an age-old extortion scheme … with a modern-day twist” by the FBI. Per the agreement, Nerayoff was entitled to 22.5 percent of all the cryptocurrency tokens sold during the ICO as well as 22.5 percent of all the funds raised by Company 1 “regardless of the method and manner in which [the funds] are raised.”