Published: Wed, April 04, 2018
Sport | By Fredrick Flores

Justice Department Sues Founders of Mayweather-Backed ICO

Justice Department Sues Founders of Mayweather-Backed ICO

"Endorsements and glossy marketing materials are no substitute for the SEC's registration and disclosure requirements as well as diligence by investors", said Steve Peikin, co-director of the SEC's Division of Enforcement.

The New York Times reported at the time that, shortly after the ICO closed on October 5, 2017, Sharma and another co-founder, Ray Trapani, also faced an unrelated perjury indictment by a Manhattan grand jury, which emerged from a drunk-driving case.

Initial Coin Offering (ICO) have received a lot of scrutiny due to the alarming number of fraudulent activities that could and have taken place.

According to SEC's complaint, Farkas was arrested as he was preparing to board a flight and leave the U.S. Sharma is also in custody but there are no details about that particular arrest.

The SEC and federal prosecutors claim that Sohrab "Sam" Sharma and Robert Farkas sold unregistered investments, "CTR tokens", to thousands of investors past year. That claim would later be referenced in the SEC's complaint as well as the filings submitted by the Justice Department.

Then, a month later, Sharma and Trapani stepped down from the company, but Farkas remained.

The Securities and Exchange Commission (SEC) last night said that both of the founders of Centra Tech, the purported financial services startup which raised the cash from "thousands" of investors, had been arrested by criminal authorities and charged with fraud. The SEC tells us this was not the case as Centra had no relationship with either credit card company.

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Henry's desire to "rush the project" and a lack of expertise caused the company to "skip fundamental steps in the design process". He waived extradition and on Tuesday afternoon was transferred from the county jail in Brownsville, Texas, to Kansas officials.

The U.S Attorney's Office for the Southern District of NY also filed criminal charges against the duo as their start-up offered unregistered investments through a "CTR Token", saying it planned to create a cryptocurrency debit card backed by Visa and Mastercard which could be used at stores just like a credit card.

Sohrab Sharma and Robert Farkas who are now heading the infamous Centra Tech Coin were reprimanded and arrested by the authorities a day before when they were all set to leave the country.

To promote the ICO, Centra Tech created fictional executives with very appealing biographies and also posted misleading marketing materials on its website.

Additionally, the duo carried out an aggressive social media campaign featuring celebrities such as undefeated boxing champion Floyd Mayweather and DJ Khaled.

The commission is reportedly probing dozens of companies that have offered cryptocurrency-related investments or have pivoted to the field.

What was Centra Tech up to?

Read the full story about how Centra's founders raised $32 million here.

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