The folks at Centra Tech are seeing new activity from Southern District of New York prosecutors related to allegations that they committed securities and wire fraud and ran a fraudulent ICO, netting money from prominent investors such as Floyd Mayweather and DJ Khaled.
Allegations covered in tech media today show Robert Farkas and other business leaders at Centra Tech accrued $25 million in 2017 by promoting the Centra Tech ICO and the emergence of Centra tokens or CTR tokens that will be used in some way shape or form on a blockchain, along with a Visa and MasterCard compatible Centra card.
In designing all of this elaborate fiction, the allegations note, the individuals also made up nonexistent people, such as a fictional CEO named Michael Edwards.
The documentation shows a far-ranging plot with the aim of snaring investor money through deceptive practices.
This type of blatant fraud is what many legislators and regulators point to when they talk about enabling bad actors through a blockchain.
This is not the kind of garden-variety regulatory question that you deal with in greenlighting a Bitcoin ETF or figuring out what happened to Telegram with its failed token bid.
In that latter case, a 17-hour deposition showed that business leaders were more or less working in good faith, and that any securities problems were a result of the complex processes in place.
This reads much more like a Bernie Madoff sort of scheme, and will probably go down as appendix 1 in any exposition of examples of how blockchain can be used dishonestly.
As for the lack of public statements by the two celebrities mentioned above, that can most likely be explained by the nature of their involvement. This is from a press release from November of 2018:
“The Securities and Exchange Commission today announced settled charges against professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, known as DJ Khaled, for failing to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs). These are the SEC’s first cases to charge touting violations involving ICOs.”
As the lawyers work, look out for these kinds of scams, because crypto can be a chaotic world.
