The people behind a high-grossing ICO have been indicted for deceiving investors in operating their cryptocurrency firm called Centra Tech.
The US Attorney’s Office for the Southern District of New York stated that it had filed charges against Sohrab Sharma, Raymond Trapani, and Robert Farkas, who established and operated Centra Tech.
Authorities claim that aside from holding an unregistered securities offering, the Centra Tech operators “engaged in fraudulent conduct and made material misstatements and omissions designed to deceive investors.” This included being dishonest about having partnerships with huge financial institutions such as Visa and Mastercard.
US Attorney Robert Khuzami said that the defendants had generated a fabricated CEO in an effort to give the scheme more credibility than it had:
“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 ICO, which was endorsed by boxing superstar Floyd Mayweather, raised $32 million at the time of the offering, but upon arresting the three suspects the Federal Bureau of Investigation (FBI) seized 91,000 ether, which are now worth approximately $67 million.
Each of the three Centra Tech Founders has been accused in a four-count indictment for conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud, and wire fraud.
The first count has a maximum sentence of five years in prison, while the other three each hold a maximum prison sentence of 20 years. They would most likely also face financial penalties. The case has been assigned to US District Judge Lorna G. Schofield.
The US Securities and Exchange Commission (SEC) has already filed separate civil charges against Sharma, Trapani, and Farkas.
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