An initial coin offering (ICO) backed by boxing superstar Floyd Mayweather, Jr., is mired in the middle of a class-action complaint.
The lawsuit involving the ICO names Sohrab Sharma, Raymond Trapani, Robert Farkas and William Hagner, as well as Centra Tech, Inc., as defendants.
They are being accused of violating U.S. securities law through a token sale that ultimately raised $30 million for the development of a cryptocurrency-focused debit card.
The filing comes a month after two of the firm’s founders departed the startup.
According to a blog post from Centra, both Sharm and Trapani exited the project following the sale’s completion.
“Centra Tech, Inc. is a new kind of finance company taking a radical approach to providing financial services through cryptocurrencies.
“We are doing that by offering the Centra Wallet 2.0 for your digital assets, offering the Centra Prepaid Card to spend your digital assets, and launching the Centra Market to buy things with your digital assets,” the post said.
It went on to announce changes to their team, saying:
“To that regard, Centra Tech has made recent additions and changes to expand our Executive Management team.
“Co-Founders Sam Sharma and Ray Trapani are stepping aside to support the continued growth of the Company.
“These seasoned entrepreneurs were passionate about creating a world connected to cryptocurrencies and they did just that.”
In the filing, lawyers alleged that the Centra sale comprised an unregistered offering and sale of securities.
The lawyers wrote:
“…in connection with Centra Initial Coin Offering (the “Centra ICO”), Defendants raised over $30 million in digital cryptocurrencies by offering and selling unregistered securities in direct violation of the Securities Act.”
The complaint also charged the defendants of misleading investors about the nature of its relationship with card networks Visa and Mastercard.
They were also accused of listing fake team members on its website.
In a statement posted to its blog, the Centra team argued the lawsuit filed by “an alleged purchaser of Centra Tokens.”
“This lawsuit, which for the most part, appears to repeat unfounded claims regarding Centra Tech, alleges that Centra Tech’s initial coin offering of Centra Tokens was an unregistered sale of securities.
“The plaintiff’s complaint attempts to mimic claims and allegations the Securities and Exchange Commission has lodged against other cryptocurrency offerors,” Centra wrote, adding:
“Centra Tech disputes the allegations in the complaint.”
Centra ICO Promoted by Mayweather
The Centra ICO was promoted by Mayweather as well as popular music producer DJ Khaled before its completion.
Though the timing is vague, the original posts by Mayweather on Instagram and Facebook that promoted the sale appear to have been deleted.
A post on Instagram by DJ Khaled is also unavailable.
Neither Mayweather or Khaled were named in the suit.
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