Two cyber-shakedown artists, including one who posed as an Irish Republican Army fighter, were busted Wednesday morning for an alleged multi-million extortion plot targeting a fledgling Seattle cryptocurrency business, prosecutors said.
Steven Nerayoff, 48, of Great Neck, L.I., and Michael Hlady, 47, of East Greenwich, R.I., were accused of threatening to destroy the start-up operation unless they were paid off on two occasions — first in November 2017, and again in March 2018, according to a federal indictment.
“As alleged, Nerayoff and Hlady carried out an old-fashioned shakedown, to be paid off with 21st century cryptocurrency,” said Brooklyn U.S. Attorney Richard Donoghue. “This office and our partners are committed to protecting businesses from extortion, whether the demands are for U.S. dollars or cryptocurrency.”
Both men were arrested for the plots to extort cash from a West Coast company, with the first incident occurring as it planned an Initial Coin Offering (ICO) to raise capital in November 2017, prosecutors alleged.
Nerayoff cut a deal with the nascent company to help the ICO succeed in return for a pre-arranged fee, only to later threaten its executives that he would sabotage the fund-raising effort and destroy the operation unless he was paid an extra $8.5 million in the cryptocurrency Ether, the indictment charged.
The Seattle group not only paid Nerayoff, but caved in a second time when threatened by the extortionist four months later, court papers alleged. He was joined in this go-round by co-defendant Hlady, who boasted that he had “taken down” a head of state and bragged of his time with the IRA, the CIA and the FBI.
According to authorities, Nerayoff demanded a “loan” of $4.45 million in Ether in return for again sparing the Seattle company from a rapid demise. Hlady allegedly sent a threatening text message as a follow-up: “I promise I will destroy your community.”
The loan was paid — and never repaid, the indictment alleged. If convicted, each defendant faces up to 20 years in prison.