Business 3 April 2018Dennis Wafula
SEC shuts down Mayweather-backed ICO over fraud charges
Startup Centra Tech is on its death bed after the U.S. Securities and Exchange Commission (SEC) charged its two founders with orchestrating a fraudulent initial coin offering (ICO). Sohrab Sharma and Robert Farkas, the co-founders of Centra Tech, were charged with selling unregistered securities to thousands of investors, raising more than $32 million in the process.
The securities regulator said Sharma and Farkas offered and sold unregistered investments through a “CTR token,” telling would-be investors that the funds raised in the token crowd sale would go towards building “a suite of financial products.” For instance, they claimed to create a Master Card- and Visa-backed debit card, allowing users to instantly convert hard-to-spend cryptocurrencies into U.S. dollars or other available legal tenders. The truth, however, is that the ICO isn’t connected with the payment processing giants.
To promote the ICO, Centra Tech created fictional executives with very appealing biographies and also posted misleading marketing materials on its website. The ICO depended heavily on celebrities and social media to market their scheme. Boxing champion Floyd Mayweather Jr. was one of the celebrities who were heavily paid to promote the ICO. He also endorsed Centra Tech in September, although his Instagram post has since been removed.
“Endorsements and glossy marketing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors,” said Steve Peikin, co-director of the SEC’s Division of Enforcement.
According to the SEC, Farkas made a flight reservation to leave the U.S. but was arrested before he could board his flight. Sharma was later arrested by law enforcement officers.
Sharma and Farkas were charged in New York with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions, return of allegedly ill-gotten gains plus interest and penalties, as well as bars the two from serving as public company officers or directors and from participating in any offering of digital or other securities.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.
Business 34 minutes ago
New York takes down dark web ring linked to crypto-related laundering
The Manhattan District Attorney has indicted three individuals who were found to have been selling counterfeit drugs on the dark web and using Bitcoin Core (BTC) to launder over $2.3 million.
Business 46 minutes ago
Russia’s secret service tried to bribe Bitcoin Core out of media mogul
While Russia’s elite is apparently busy buying billions of dollars in cryptocurrency, some other Russians decided to try and get theirs the old-fashioned way – stealing it.
Business 1 hour ago
Coinnest exchange shuts down after a series of embarrassing incidents
This will come as an absolute shock to about zero people. The Coinnest cryptocurrency exchange, the fifth-largest in South Korea, has closed its doors.