After pleading guilty for operating an initial coin offer that defrauded his victims, Sam Sharma, co-founder of cryptocurrency firm Centra Tech was sentenced to eight years in prison
The US Department of Justice stated that Sharma was charged with conspiring to commit wire fraud, securities fraud and mail fraud.
In 2017, Sam and co-defendants Robert Farkas, Raymond Trapani founded Centra Tech, a Miami-based company that offers cryptocurrency-related financial products. They conned victims into spending more than $25,000,000 to create a debit card that allows users to use cryptocurrency to purchase at any merchant accepting Visa and Mastercard.
“Sohrab Sharma lied to investors, claiming that his co-founded start-up had created cutting-edge cryptocurrency-related financial services. “In reality, Sharma’s greatest inventions were fake executives, fake partnerships, and fake licenses. He and his co-conspirators claimed to have tricked victims into paying tens of thousands of dollars,” stated Ilan Graff, US Attorney.
While ICO investors collectively paid millions of dollars to purchase what turned out not to be valuable tokens, Sohrab along with his accomplices used their money to finance an extravagant lifestyle.
Celebrities were caught up in the ICO Mania
The executive team also lied about their Harvard-educated CEO, as well as other aspects of the business. In order to attract investors, the promotional content that they used on their website was fake. The price of CTR, its token, was artificially inflated. This was part of an investor cash ‘pump-and-dump’ scheme that ultimately led to the plummeting value of associated tokens.
The case began with a 2018 civil complaint, which was stayed while the criminal case was filed. The SEC also filed an action against Floyd Mayweather, a retired boxer, and DJ Khaled for promoting Centra Tech’s ICO and its Centra Card’.
ICO operators and scammers were trying to profit from the intersection of celebrities with cryptocurrency enthusiasts in order to get money from investors in this hot market. The US Securities and Exchange Commission (SEC), was forced to issue an official statement directing the celebrities involved to disclose the nature, scope and amount the compensation they received for their endorsement.