SEC Swoops on Centra Tech ICO Scam
The US Securities and Exchange Commission (SEC) and the Justice Department have leveled criminal charges against the founders of Centra Tech, which was backed by former world boxing champion Floyd Mayweather. Robert Farkas and Sohrab “Sam” Sharma are accused of raising over $32 million for a planned cryptocurrency while failing to register the initial coin offering (ICO) and lying to investors.
In a complaint filed in a federal court in the Southern District of New York, the authorities allege that the project co-founders misled investors by claiming to have a partnership with card providers MasterCard, Visa and the Bancorp while none existed. The duo are also accused of planning to sell digital tokens without complying with federal securities laws.
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses,” SEC enforcement division co-director Stephanie Avakian said in a statement.
According to the SEC, the two convinced investors to buy their CTR token, telling them that the funds raised through the ICO would be used to launch a suite of financial products. The partnership with the debit card firms will allow users to convert their CTR tokens to US dollars or other legal tenders, the complaint alleges.
In addition, Farkas and Sharma “created fictional executives with impressive biographies” to promote the ICO and posted false and misleading marketing materials on the company’s website. They even paid celebrities to endorse the ICO on social media.
Steve Peikin, co-director of the SEC’s Division of Enforcement, added:
“The defendants relied heavily on celebrity endorsements and social media to market their scheme. Endorsements and glossy marketing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors.”
Both Farkas and Sharma are now in police custody. Farkas was arrested as he was about to board a flight after making reservations to leave the country. Authorities later tracked Sharma and placed him in detention.
In September, Mayweather posted a Tweet endorsing the Centra token sale. It was the third ICO the “Money” had promoted in 2017.This article appeared first on Cryptovest
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.