East Greenwich Businessman Pleads Guilty in Brooklyn Federal Court to Extorting Cryptocurrency

Saturday, April 10, 2021

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This week in federal court in Brooklyn, Michael Hlady of East Greenwich pleaded guilty before United States Chief District Court Judge Margo K. Brodie to conspiring to extort a startup company for millions of dollars in the cryptocurrency Ether (ETH). 

When sentenced, Hlady faces up to 20 years in prison, as well as a fine. Hlady also goes by the name Michael Peters.

Mark J. Lesko, Acting United States Attorney for the Eastern District of New York, announced the guilty plea.

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“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,” stated Acting United States Attorney Lesko.  “This Office and its law enforcement partners are committed to protecting businesses from extortion in whatever manner it is perpetrated.”  

When Hlady was charged in 2019, GoLocal reported in September of 2019 about other controversies he had been involved with.

Hlday’s Worcester Rip-Off

Hlady fleeced Venerini Academy in Worcester out of more than $360,000, was sentenced to 2½ years in jail In January of 2016 for violating the terms of his probation, as reported by the Telegram.

The sentence was imposed by Judge Shannon Frison. The school’s mission is that it “serves God by Educating to Save and Set Free. In partnership with families, we develop the whole child through rigorous academics in a safe and respectful environment.”

The Venerini Sisters were never made whole by Hlday. “St. Rosa Venerini made it her mission in 17th century Italy to save girls from ignorance by leading them onto a path of salvation and liberation through education. In her honor, Venerini has dedicated over sixty years to provide academic, spiritual, and moral education to transform students into curious learners and enlightened leaders. We put them on a path of purpose-driven learning and success with the goal of forming them into engaged, faith-centered, and inspired students who are eager to know, love, and serve God and others.”

The Brooklyn Case

As set forth in court filings and this week’s proceeding, the victim company (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. 

According to the Justice Department, to raise capital, the Company planned to conduct an Initial Coin Offering (“ICO”) 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.

Nerayoff has entered a plea of not guilty to extortion charges and is awaiting trial. Nerayoff once appeared on GoLocal LIVE to discuss the impact of Blockchain technology.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Mark E. Bini and Andrey Spektor are in charge of the prosecution. 

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