Founders of Celebrity-Backed Cryptocurrency Charged with Fraud
By the C|C Whistleblower Lawyer Team
Two founders of Centra Tech, a cryptocurrency firm that was endorsed by Floyd Mayweather, have been charged with carrying out a fraudulent $32 million initial coin (“ICO”) offering by the SEC. The co-founders of Centra, Sohrab Sharma and Robert Farkas, claimed to offer a debit card backed by Visa and Mastercard that allow people to convert cryptocurrency to U.S. dollars to spend it in stores. The SEC alleged that Centra had no relationship with either company.The SEC has repeatedly cautioned that ICOs in particular are susceptible to fraud. Despite the warnings, the token sales continue to raise billions. The agency has said it considers the vast majority of those offerings to be securities, which requires registration to comply with federal law.
A co-director of the S.E.C.’s enforcement division, Stephanie Avakian, said in a statement that the Centra co-founders had “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.”
Sharma and Farkas allegedly created fake biographies of fictional executives and paid celebrities to tout the ICO on social media. Sharma and Farkas also enlisted the undefeated boxing champion to tout the upcoming offering on social media. Mayweather, who has more than 8 million Twitter followers, promoted the offering by posting on the social media site “Centra’s (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine.” Mayweather wasn’t accused of wrongdoing.