Sohrab “Sam” Sharma and Robert Farkas, two co-founders of Centra Tech, an initial coin offering (ICO) project endorsed by boxing legend Floyd Mayweather, have been arrested on charges of fraud levied by the US Securities and Exchange Commission (SEC) and Justice Department.
The SEC published a press release on April 2 saying that Sharma and Farkas orchestrated a fraudulent ICO that raised over $32 mln in 2017 from thousands of investors. According to the press release, the Centra Tech ICO project aimed to provide its users with “a debit card backed by Visa and MasterCard that would allow users to instantly convert hard-to-spend cryptocurrencies into U.S. dollars or other legal tender.” However, the SEC release claims that “Centra had no relationships with Visa or MasterCard.”
To add to their fraud allegations, the SEC claims that Sharma and Farkas “created fictional executives with impressive biographies, posted false or misleading marketing materials to Centra’s website, and paid celebrities to tout the ICO on social media.”
The US Justice Department published their own charges against Sharma and Farkas, adding that “at least seven of those 38 states” that were claimed to have approved the company to operate in their territory “have no record of any such licenses being issued to Centra Tech."
The SEC is seeking permanent injunctions and a return of Centra’s gains plus interest and penalties while the Justice Department’s release indicates that each of the two men may face up to 20 years in prison for fraud.