Centra Tech Co-founders Indicted in $60 Million ICO Fraud

May 17, 2018
75 Views


· May 16, 2018 · 7:00 pm

A grand jury in the Southern District of New York has indicted the three co-founders of Centra Tech. The U.S. Attorney’s Office of the district issued a press release on May 14 announcing the indictment.


The Centra Tech Fraud

Sorhab Sharma, Raymond Trapani, and Robert Farkas, the three co-founders of Centra Tech allegedly tried to defraud investors via a token sale. They were all arrested in April 2018 and charged with the same crimes. Commenting on the indictment, Deputy U.S. Attorney for the Southern District of New York, Robert Khuzami said that:

As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market.  They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO.  Whether traditional or cutting-edge, investment vehicles can’t legally be peddled with falsehoods and lies.

The indictment alleges that the three men solicited investors to purchase unregulated securities. The securities in the form of CTR digital currency tokens were sold in an illegal ICO.

The Centra Tech founders also deceived investors into thinking the company had struck partnership deals with reputable corporations. Part of the ICO marketing narrative included purported collaborations with Visa, Mastercard, Bancorp. They also said Centra Tech secured money transmitter license in 38 states in the U.S.

From Left to Right: Sorhab Sharma, Raymond Trapani, and Robert Farkas

Under these pretenses, investors put up about 91,000 ether tokens currently valued at $60 million. Celebrities like the boxer, Floyd Mayweather, and rapper, DJ Khaled also endorsed the project. The SEC soon discovered the Centra Tech project to be a fraud leading to the arrest of the co-founders.

Sharma, Trapani, and Farkas face a total of 65 years in prison based on the indictment against them. The three of them are also liable to pay financial penalties on account of the charges, and they will remain in custody pending subsequent action by the court.

Crackdown on Illegitimate ICOs

2017 saw ICOs dominate the crypto space for much of the year with numerous projects raising hundreds of millions of dollars. With the industry virtually unregulated, fraudulent schemes became the order of the day. In response, financial regulators have begun to adopt a more hands-on approach to monitoring and regulating the market.

From blanket bans in places like China to strict measures in the U.S., the wild west days of ICOs may soon be at an end. Since the start of 2018, the SEC has repeatedly declared its intention to keep a watchful observance of the ICO arena. The Centra Tech co-founders are also up on civil charges filed against them by the SEC.

Is the indictment of the Centra Tech co-founders a positive development? Will more robust ICO monitoring impact positively on the market? Let us know in the comment section below.


Image courtesy of Business Insider, Shuterstock

Show comments





Source link

You may be interested

Bitcoin bottom or dead cat bounce? Short squeeze in a bear market. Take profit targets?
Video
15 views
Video
15 views

Bitcoin bottom or dead cat bounce? Short squeeze in a bear market. Take profit targets?

Editor - September 26, 2018

Richard Heart: Billionaire, blockchain thought leader, cryptocurrency investor, author, serial entrepreneur, Bitcoin OG http://BitcoinHEX.com 10% off: ... source

Blockfest 2018 explores the potential of blockchain in South-East Asia
Blockchain News
11 views
Blockchain News
11 views

Blockfest 2018 explores the potential of blockchain in South-East Asia

Editor - September 26, 2018

[ad_1] Blockfest 2018 explores the potential of blockchain in South-East Asia  The Star OnlineFull coverage [ad_2] Source link

Ethereum Co-founder: Cryptocurrency Next Logical Step in Evolution of Money
Ethereum News
13 views
Ethereum News
13 views

Ethereum Co-founder: Cryptocurrency Next Logical Step in Evolution of Money

Editor - September 26, 2018

[ad_1] Ethereum Co-founder: Cryptocurrency Next Logical Step in Evolution of Money  newsBTCFull coverage [ad_2] Source link

Leave a Comment

Your email address will not be published.