U.S. prosecutors are planning an "oversized" response to a motion to dismiss in an ongoing – and potentially precedent-setting – initial coin offering (ICO) fraud lawsuit.

As previously reported by CoinDesk, Maksim Zaslavskiy has been accused of committing securities fraud in connection with two ICOs, RECoin and Diamond Reserve Club World. In September of last year, the U.S. Securities and Exchange Commission (SEC) filed suit, and in November Zaslavskiy was arrested and charged by the Department of Justice (DOJ). That move led to the SEC suit being stayed pending the outcome of the DOJ action, and Zaslavskiy has pled not guilty to the allegations.

Now, Zaslavskiy is seeking to have the lawsuit dismissed on the argument that tokens sold through an ICO aren't considered securities. The SEC has said differently, and the case has set the stage for a U.S. federal court to weigh in on the question of whether token sales can be considered securities offerings.

Ahead of that decision, the Department of Justice is set to submit a memorandum of law that is expected to rebut the defense's claim.

According to a letter dated March 14, that filing is expected to exceed the maximum size allowed by the court for such arguments, necessitating a request for an exception. While the letter from U.S. Attorney Richard Donoghue doesn't offer any clues as to the exact details of the government's argument, the move signals that the filing in question will be a significant one.

"The defendant raises a number of arguments in his brief regarding the dismissal of the indictment," Donoghue wrote, explaining:

Donoghue asked for permission to file as many as 40 pages, though he said that the department would aim to keep the filing – which Zaslavskiy has consented to – beneath that limit.

The deadline for the DOJ's filing is Monday, March 19.

Justice statue image via Shutterstock

Read the letter here:

Letter for Exemption by CoinDesk on Scribd

Read Zaslavskiy's Motion to Dismiss here:

Motion to Dismiss by CoinDesk on Scribd