Co-founder of Centra Tech, Robert Farkas, was recently sentenced to one year in jail after he pleaded guilty to operating a fraudulent ICO scheme that raised $25 million from investors.
Farkas accused and jailed
According to a statement from the US Department of Justice, the co-founder was accused of conspiring to commit securities and wire fraud. The prosecutors initially opted for a $250,000 fine and a sentence of between 5 to 7 years. The co-defendants in the case- Raymond Trapani and Sohrab Sharma, originally founded Centra Tech in 2017 with Farkas.
The three rode the ICO wave and collected over $25 million from investors, promising to develop a debit card that allows users to make crypto purchases at any business accepting Mastercard or Visa. US attorney Ilan Graff explained the fraud, saying,
“Farkas and his co-conspirators created fictitious executives and fabricated business relationships with legitimate institutions to dupe investors into handing over millions of dollars for a fraudulent ICO. We will continue to aggressively pursue frauds like this one, whether they involve traditional securities or newer financial instruments and crypto-assets.”
The tokens eventually turned out useless while Farkas and the other co-founders of Centra went on to live a lavish life with the investor funds.
ICO mania took over celebrities
The executive team of Centra lied about their CEO and claimed that he was educated at Harvard. They also made several other misrepresentations about their business. All the promotional content on their website was fraudulent and the token’s price was inflated artificially to bring in more investments. The team created a pump and dump scheme in which they first inflated the price of the token artificially, after which it eventually plummeted.
The ruling against Centra comes as the US authorities continue their crackdown on crypto frauds. The regulator has also filed actions against DJ Khaled and Floyd Mayweather for promoting the ICO. The case originated in 2018 after a civil complaint. A criminal complaint was filed in early 2019.
