So what is it with boxers and bogus initial coin offerings?
The Securities and Exchange Commission (SEC) has filed a complaint alleging securities fraud with another ICO. This time it is Centra Tech, the creation of Sohrab “Sam” Sharma and Robert Farkas. The ICO reportedly raised over $32 million from “thousands” of investors. Farkas and Sharma claimed they were issuing a debit card backed by Visa and Mastercard that would allow holders to convert between crypto and back to dollars. The SEC tells us this was not the case as Centra had no relationship with either credit card company.
Centra benefited from a high profile pump as Floyd “Crypto” Mayweather promoted the ICO via Twitter telling his millions of followers;
“Centra’s (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine.”
Centra’s (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine https://t.co/nSiCaZ274l pic.twitter.com/dB6wV0EROJ
— Floyd Mayweather (@FloydMayweather) September 18, 2017
Centra Tech even announced Mayweather as an “official Brand Ambassador.”
“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,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. “As the complaint alleges, these and other claims were simply false.”
Steve Peikin, Co-Director of the SEC’s Division of Enforcement, said the defendants relied heavily on celebrity endorsements to market the scam.
“Endorsements and glossy marketing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors.”
The SEC shares that Farkas made flight reservations to leave the country, but was arrested before he was able to escape. Sharma was arrested too as both have been hit with criminal charges.
Centra Tech has received the trifecta of scam ICOs. This ICO has not only been the target of an SEC enforcement action and criminal charges, but Centra was hit with a class action suit last December.
The SEC’s complaint charges Sharma and Farkas with violating the anti-fraud and registration provisions of the federal securities laws. The U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against the duo.