According to a complaint filed in in the District Court of Southern New York by the a Securities and Exchange Commission, Robert Farkas and Sohrab “Sam” Sharma were operating an initial coin offering fleeced investors out of over $32 million through a business called Centra Tech. Inc. Farkas was arrested while trying to leave the country.
The SEC has alleged that the founders of the startup pay celebrities to promote their business. One of the celebrities who have been actively involved in promoting the ICO is Floyd Mayweather who endorsed Centra. He has since deleted the Instagram post.
In the recent months, ICOs have been at the center of focus for regulatory crackdowns. Many ICO s are very causious about attracton a lot of attention. However, this is not the case with Centra Tech. the startup also lied to its customers that it had relationships with several financial companies Mastercard, Bancorp and Visa. These companies have dissociated themselves with the ICO, a move that attracted more scrutiny into its activities.
The startup did not only exaggerate its connections but also falsified its executives’ credentials. The ICO listed “Michael Edwards” as the Chief Executive Officer and Co-Founder. According to the LinkedIn profile Edwards, he is an extensive career in banking with an M.B.A. from Harvard University. Centra Tech listed as “Jessica Robinson” as its Chief Financial Officer and recently served at Johnson Communications as the CFO for almost five years. Neither Robinson nor Edwards is a real person.
Despite showing several red flags, the startup was listed on leading major cryptocurrency like Cryptopia and Binance. It is yet to be delisted and can still be purchased. Centra Tech’s app was also approved on Google Play Store and Apple App Store, a move that helped hide its lie. Its website is also still active.
The startup has been the focus of the press and increasing skepticism on cryptocurrency forums. It was hit with its first lawsuit from a burned investor in December. Farkas was arrested while attempting to board a flight out of the country.
The SEC is seeking to have the two give up on the money which the obtained falsely in addition to being barred from serving as officers in any public company.