In what prosecutors have called a first, a New York federal judge on Tuesday ruled that U.S. securities laws may cover an initial coin offering.

U.S. District Judge Raymond Dearie said that the government can proceed with a case alleging that an initial coin offering is a security for purposes of federal criminal law.

The ruling came in a criminal case against a man charged with promoting digital currencies backed by investments in real estate and diamonds that prosecutors said didn’t exist.

The Brooklyn resident was arrested in November on charges that he defrauded investors in two cryptocurrencies, violating the federal Securities Exchange Act.

Cryptocurrencies are digital assets that may be treated as currency by their users, though they are not legal tender. Initial coin offerings (ICOs) soliciting investments in new cryptocurrencies have raised billions of dollars in recent years.

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In the case, U.S. V. Zaslavskiy, 17-cr-0647, U.S. District Court for the Eastern District of New York (Brooklyn),  Prosecutors argued that investments offered by the defendant in the two ICOs,  ReCoin Group Foundation and Diamond Reserve Club,  were “investment contracts” that were securities under federal securities laws.

Investors did not receive any digital asset, nor did Zaslavskiy ever purchase any real estate, hire a broker for investments or sell more than 2.8 million tokens as he claimed in marketing materials.

In March, Zaslavskiy’s lawyers asked Dearie to dismiss the charges, arguing that REcoin and Diamond were currencies, not securities, and therefore not covered by the Securities Exchange Act.

Dearie rejected that argument, writing on Tuesday that the federal securities law must be interpreted “flexibly.”