Robert Farkas, the co-founder of Centra Tech, partnering with Sohrab Sharma and Raymond Trapani, both of whom are also defendants in the lawsuit. The crypto scam raised over $32 million in an ICO that lasted nine months, relying on lies, misrepresentations and celebrity endorsements to lure investors. Floyd Mayweather and DJ Khaled endorsed the crypto scam to their social media followers, for which they paid penalties. The defendants pleaded guilty on two counts of fraud.
Farkas pleaded guilty on two counts of frauds.
Centra Tech claimed to be building financial products for the digital currency economy. In order to lure investors, the founders of the company claimed that they had struck a partnership with Bancorp, VISA and Mastercard. This would enable Centra Tech to issue the ‘Centra Card’, a VISA or Mastercard debit card that would make it possible to spend digital currencies easily, so the investors thought. According to the Department of Justice announcement, defendants also lied about the company’s leadership to the investors. The three founders led investors to believe that Centra Tech would be led by ‘Michael Edwards’ as the CEO.
Floyd Mayweather and DJ Khaled endorsed the crypto scam.
Robert Farkas and his co-conspirators lied to the investors that they had acquired money transmitter licenses in 38 states. The well-known boxing champion Floyd Mayweather and music producer DJ Khaled took endorsed Centra Tech to their followers on social media. However, the US SEC pursued the two for failing to disclose that they received compensation from the startup for their endorsement. Mayweather and DJ Khaled settled the suit by paying the penalty without admission of wrongdoing. The U.S Attorney in charge of the case, Craig Stewart cautioned firms in the digital currency and beyond against using deceit to raise money. The US SEC has brought down many crypto companies that held unlawful ICOs.