The creators of an initial coin offering (ICO) once endorsed by Floyd Mayweather and DJ Khaled have been arrested and indicted on separate federal securities fraud charges brought by federal prosecutors and the Securities and Exchange Commission. Earlier this year, the SEC shut down another ICO, known as AriseBank.
In 2017, according to the SEC, Sohrab “Sam” Sharma and Robert Farkas, who founded Centra Tech, managed to raise $32 million from thousands of people for their “CTR Token,” an Ether-based coin.
The organizers had claimed in 2017 that they had a Visa and MasterCard debit card service that would allow users to “instantly convert hard-to-spend cryptocurrencies”—but no such relationship with those companies apparently existed.
“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, co-director of the SEC’s enforcement division, said in a statement. “As the complaint alleges, these and other claims were simply false.”
The New York Timesreported at the time that, shortly after the ICO closed on October 5, 2017, Sharma and another co-founder, Ray Trapani, also faced an unrelated perjury indictment by a Manhattan grand jury, which emerged from a drunk-driving case.
Then, a month later, Sharma and Trapani stepped down from the company, but Farkas remained. This was weeks after the completion of the ICO in October 2017.
On his Instagram page, Trapani describes himself as a “credit repair specialist.”
“I truly believe that the product will be developed in the near future,” Allan Shutt, the company’s general counsel, told Business Insider in November 2017. “The money is not in jeopardy. It’s certainly not a scam.”
Neither Shutt nor anyone else from Centra responded to Ars’ request for comment.