Two companies and a businessman have been charged by the Securities and Exchange Commission for allegedly defrauding investors in a pair of initial coin offerings, one of which was backed by real estate.

Maksim Zaslavskiy, who owned both companies, allegedly declared he had raised between $2M and $4M from investors and touted his company, REcoin Group, as being the first real estate-backed cryptocurrency. He also claimed to have a team of lawyers, professionals, brokers and accountants working to invest ICO proceeds. But the SEC found these people had been neither hired nor consulted.

In the case of both REcoin and Diamond Reserve Club World, also known as DRC World (which purportedly invested in diamonds), investors were sold digital coins or tokens that did not actually exist.

"Investors should be wary of companies touting ICOs as a way to generate outsized returns. As alleged in our complaint, Zaslavskiy lured investors with false promises of sizeable returns from novel technology," SEC New York Regional Office Director Andrew M. Calamari said in a release.

The SEC has since obtained a court order to freeze all assets related to Zaslavskiy and his companies and has charged them with violations of the anti-fraud and registration provisions of the federal securities law. The investigation is ongoing.