The U.S. Securities and Exchange Commission (SEC) on Monday charged two co-founders of Centra Tech with orchestrating a fraudulent initial coin offering that raised more than $32 million from thousands of investors in 2017.
According to a Securities and Exchange Commission complaint filed in the District Court of Southern New York, Sohrab “Sam” Sharma and Robert Farkas were the operators of an initial coin offering though a business called Centra Tech Inc.
The company’s ICO paid for public endorsements from celebrities including Floyd Mayweather Jr. and DJ Khaled.
“As we allege, the defendants relied heavily on celebrity endorsements and social media to market their scheme,” Steve Peikin, co-director of the SEC’s Division of Enforcement, said. “Endorsements and glossy marketing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors.” he added.
Sharma and Farkas allegedly claimed that funds raised in the initial coin offering would help build a suite of financial products, including a debit card backed by Visa Inc. (TIKER: 3V64.FWB) and Mastercard Inc. (TIKER: MA.NYSE) that would allow users to convert cryptocurrencies into U.S. dollars or another currency.
Messrs. Sharma and Farkas were charged with violating the antifraud and registration provisions of the federal securities laws.
CTR — the coin that Centra Tech created for its ICO — got listed on major cryptocurrency exchanges such as Binance and Cryptopia where it appears it can still be purchased; its wallet app was approved on the Apple App Store and Google Play Store.
by Anton Lysenkov