The SEC is charging two cash-and-car-loving crypto founders with fraud after their $32 million initial coin offering
- Federal authorities on Monday arrested and charged Sam Sharma and Robert Farkas, the founders of Centra, with fraud related to the startup's initial coin offering.
- Centra, which claimed to be building a debit card for cryptocurrencies, raised $32 million in its September ICO.
- Sharma and Farkas are facing both civil charges from the Securities and Exchange Commission and federal criminal charges.
Two Miami-based founders behind the controversial cryptocurrency startup Centra are facing federal criminal and civil charges related to the company's $32 million initial coin offering (ICO) in September.
Criminal authorities have charged and arrested Sam Sharma and Robert Farka, accusing them of orchestrating a fraudulent ICO, the US Attorney's Office for the Southern District of New York announced Monday. Additionally, the Securities and Exchange Commission announced civil fraud charges against the pair in a related action.
"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," Stephanie Avakian, codirector of the SEC's Division of Enforcement, said in a statement. "As the complaint alleges, these and other claims were simply false."
Farkas allegedly made a flight reservation to leave the US but was arrested before boarding his flight, according to the SEC.
Centra sold $32 million in "CTR Tokens" to investors in September, saying it planned to create a cryptocurrency debit card backed by Visa and Mastercard that could be used at stores just like a credit card. The SEC alleges that Centra had no relationship with Visa or MasterCard. The SEC also alleges that Sharma and Farkas created "fictional executives with impressive biographies" to promote the ICO to investors.
Following its own investigation, Business Insider in November reported it had similarly found multiple fake executive profiles. At the time, the company attributed those profiles to mistakes made by freelancers.
In addition to the other charges, the SEC alleges the company posted false or misleading marketing materials to its website and paid celebrities to "tout the ICO on social media."
After announcing its product in August 2017, Centra brought on board celebrity endorsers including boxer Floyd Mayweather and musician DJ Khaled to promote its fundraising effort.
Representatives for Centra did not immediately respond to a request for comment.
Get the latest Bitcoin price here.>>
- Dr Pepper forced to give $100K prize to BOTH contestants after boos erupt following odd tie-breaker at SEC championship halftime contest
- BHEL among 5 bidders for Rs 58,000 cr deal to manufacture, maintain 200 Vande Bharat trains
- ChatGPT is a new AI chatbot that can find mistakes in your code or write a story for you
- Google Pixel Fold, the company’s foldable phone, could soon become a reality as it appears on Geekbench ahead of its launch next year
- More than one in five people experience violence and harassment at work: ILO
- End of revenge spending? Urban spending to taper off in the next few quarters, says Motilal Oswal
- Rupee falls 24 paise to 82.09/$ amid rising crude, foreign fund outflows
- City of Joy mourns the loss of Dominique Lapierre