EAST GREENWICH- An East Greenwich man is facing up to 20 years in a federal prison after pleading guilty last week in a Brooklyn Federal Courtroom. Michael Hlady, also known as Michael Peters, pled guilty to conspiring to extort a startup company for millions of dollars in the cryptocurrency Ether, according to the U.S. Attorney’s Office.
According to the court filings in the case and details from the plea hearing, the victim company was a startup mobile-based business that issued cryptocurrency tokens such as Ether as loyalty rewards for generating user traffic to its clients’ products. In order to raise needed capital, the Company planned to conduct an Initial Coin Offering in November 2017.
In connection with the ICO, Hlady told the Company’s executives that he had been a part of the Irish Republican Army, the National Security Agency, the Central Intelligence Agency and the Federal Bureau of Investigation; that he had been shot at and had killed people; and that he had ‘taken down’ a head of state.
In March 2018, Hlady and his co-conspirator Steven Nerayoff issued threats to Company executives that included destruction of the Company if it did not agree to demands for additional funds and Company tokens. On March 28, 2018, Hlady sent a text message to a Company executive stating, in part, ‘I promise I will destroy your community’ if the Company did not comply with the demands.
As a result of this threat, the Company transferred 10,000 ETH to Nerayoff. At the time 10,000 ETH was worth approximately $4.45 million, according to the U.S. Attorney’s Office.
Mark Lesko, Acting United States Attorney for the Eastern District of New York, said that he is thankful for the Federal Bureau of Investigation, New York Field Office, for their help on the case.
“Hlady and his co-conspirator used strong-arm tactics to shake down a startup company of cryptocurrency and will now face punishment just like anyone else who extorts a business,” Lesko said. “This Office and its law enforcement partners are committed to protecting businesses from extortion in whatever manner it is perpetrated.”
When Hlady was indicted, FBI Assistant Director-in-Charge William Sweeney Jr. stated, “when you peel back the layers of this case, an age-old extortion scheme is revealed with a modern day twist.”
“Imposing forceful demands on a company for personal gain is risky business, whether one’s preference is to be paid off with cryptocurrency or cold hard cash. The FBI will continue to seek justice for victims who businesses have been targeted by these types of scams,” he added.
It is undetermined when Hlady will be sentenced.
