Man pleads guilty in Brooklyn Federal Court to extortion scheme

Told victims he had ties to CIA, FBI and IRA

April 7, 2021 Brooklyn Eagle Staff

U.S. Chief District Judge Margo Brodie. Eagle file photo

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On Monday, in federal court in Brooklyn, Michael Hlady, aka Michael Peters, 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.

The victim company, which was not named, was a startup mobile-based business that issued cryptocurrency tokens such as ETH as loyalty rewards for generating user traffic to its clients’ products.

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 he did not comply with the demands. As a result of this threat, the company transferred 10,000 ETH to Nerayoff, according to court filing.

Nerayoff has entered a plea of not guilty to extortion charges and is awaiting trial.

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

“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.”

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.