U.S. federal prosecutors have called on the New York district court to hand a substantial prison sentence to the founder of a $25 million ICO scam. The prosecutors argued that this will deter similar criminal conduct and promote respect for the law.
In their sentencing memorandum, filed at Southern District of New York, the prosecutors laid out their arguments as to why Robert Farkas deserved a heavy prison sentence. Farkas is the founder of Centra Tech, a cryptocurrency startup that raised over $25 million in its ICO. Centra Tech relied on celebrity endorsements from boxing champion Floyd Mayweather and music producer DJ Khaled to lure investors. It also made several false statements, including claiming it had partnered with Bancorp, VISA and Mastercard.
Farkas pleaded guilty in June to conspiracy to commit securities and wire fraud, each of which carries a maximum of five years behind bars.
Now, prosecutors are pushing the court to hand out the toughest sentencing possible to Farkas.
They stated, “In view of the need in this case to reflect the seriousness of the offense, afford just punishment, promote general deterrence, and encourage respect for the law, a sentence requiring Farkas to serve a substantial term of imprisonment is necessary to meet the goals of sentencing as set forth.”
The prosecutors referred to the nature and circumstances of Farkas’ crime as one of the reasons he deserved the sentence. They refuted his claims that he deserved leniency since most of the money he stole was available to refund the victims.
“The victim impact statements submitted by some of victims in this case illustrate the financial, personal, and emotional harm that Farkas and his co-conspirators inflicted when they repeatedly lied to investors to raise funds and then used those funds for their own personal benefit,” the prosecutors stated.
The substantial sentence of incarceration is also necessary to deter similar crimes in the future and promote respect for the law, they argued. While ICOs have opened new fundraising doors for thousands of companies, such ICO fraud will make it harder for honest token issuers to access funding.
The prosecutors also argued against Farkas’ request for home confinement and significant sentence variance based on his medical history.
Farkas’ sentencing will bring to an end a saga that exposed the commercial use of celebrities in the ICO hype to lure unsuspecting investors. DJ Khaled and Mayweather paid fines after settling with the U.S. Securities and Exchange Commission (SEC).
See also: CoinGeek Live presentation, Smart Contracts & Tokens on Bitcoin SV: Going Mainstream
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.