Breaking News
0

SEC Nabs Mastermind Behind Mayweather Endorsed ICO Centra

Cryptocurrency NewsApr 22, 2018 03:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
SEC Nabs Mastermind Behind Mayweather Endorsed ICO Centra

In a classic example of celebrities probably needing to stay in their own lanes, an ICO endorsed by a boxing champ has been found to be fraudulent by the U.S. Securities and Exchange Commission and the Department of Justice.

This case involves Centra Tech, which raised $32 million through an ICO in September of last year. Famed boxer Floyd Mayweather threw his weight behind it by endorsing it.

Since, investors who may have invested based on his endorsement have learned the hard way that it’s a bad idea to part with dollars because a celebrity claims an idea is worthy of such an action.

The SEC on Friday filed fraud charges against the alleged mastermind behind the ICO, Raymond Trapani. These charges marked the third such filing by the SEC in regards to this ICO.

Let’s discuss.

Debit cards and cryptos

The Centra ICO was conjured up by at least three characters. According to the SEC, these people include Raymond Trapani, who was charged Friday. The SEC calls him the mastermind behind the scheme.

At the beginning of April, we reported to you that the SEC had swooped in with criminal charges against two others for their roles in the scheme. Those two are Robert Farkas and Sohrab “Sam” Sharma.

The trio allegedly marketed an ICO in which they claimed they were affiliated with Mastercard and Visa.

The scheme worked like this:

From July 2017 through March 2018, the trio solicited investors to purchase so-called Centra Tech tokens. They claimed they had created a debit card, the “Centra Card,” that allowed users to load the card with the crypto of their choice and then use the “Centra Card” to make purchases anywhere Visa or Mastercard was accepted.

The claim was made that Centra Tech held the necessary financial servicing licenses from Visa and Mastercard in 38 states. The Justice Department and the SEC say that claim was false.

Investors who fell for the pitch forked over more than $25 million to buy the Centra Tech token. Again, a total of $32 million was raised.

SEC’s action reflects its determination to root out bad actors

Because the SEC had already filed charges against Farkas and Sohrab, the charges filed against Trapani amended that one. The new charges further allege that Trapani and Sharma manipulated trading in the CTR tokens to generate interest in the company and prop up the price of the tokens.

Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, said in the release about the charges:

“We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology. Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”

Specifically, the SEC charges Trapani with violating the anti-fraud and registration provisions of the federal securities laws. The amended complaint seeks permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, as well as bars against Trapani prohibiting him from serving as a public company officer or director and from participating in any offering of digital or other securities.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York also announced criminal charges against Trapani.

Text message demise

If the allegations made by the SEC about the ICO are true, this trio wasn’t very clever in trying to pull off the scheme. They discussed their ripoff scheme in text messages.

The SEC found that after receiving a cease-and-desist letter from a major bank directing him to remove any reference to the bank from Centra’s marketing materials, Sharma texted to Farkas and Trapani the following:

“[w]e gotta get that s[***] removed everywhere and blame freelancers lol.”

Then, while trying to get the CTR Tokens listed on an exchange using phony credentials, Trapani texted to Sharma:

“cook me up” a false document…”

Sharma replied:

“Don’t text me that s[***] lol. Delete.”

Mayweather endorsement

While the details are sketchy, the trio managed to get boxing champ Floyd Mayweather to endorse the ICO.

In September of last year, Mayweather posted on Twitter a picture of himself holding a Centra card.

He’s not named in the SEC’s filing, nor is it clear how he came to throw his name behind the alleged scam.

Another interesting legal development regarding this ICO came in December. That’s when a class action lawsuit was filed over the ICO.

We’ll keep you posted about what happens in this case.

In the meantime, this should be a reminder to not make investment choices based on celebrity endorsements. Remember, they probably need to stick to whatever made them famous, and not advise on issues that fall outside of that, i.e. cryptos.


This article appeared first on Cryptovest
SEC Nabs Mastermind Behind Mayweather Endorsed ICO Centra
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email