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Justice Department Charges Founders of Mayweather-Backed ICO

Federal authorities have charged the founders of Centra Tech with securities and wire fraud, shortly after their ICO was shut down by the SEC.

Apr 3, 2018 at 5:30 p.m. UTC
Updated Sep 13, 2021 at 7:46 a.m. UTC

The Justice Department has filed charges against the founders of an initial coin offering endorsed by heavyweight champion Floyd Mayweather, Jr., adding to the allegations levied Monday by the Securities and Exchange Commission (SEC).

Sohrab Sharma and Robert Farkas were arrested and hit with charges of fraud, as CoinDesk previously reported after the SEC filed suit in the U.S. District Court for the Southern District of New York.

According to statements from the U.S. Department of Justice issued Tuesday, the two stand accused of "conspiring to commit, and the commission of, securities and wire fraud in connection with a scheme to induce victims to invest more than $25 million in investments through material misrepresentations and omissions."

Centra's pitch to investors included the claim that it would issue a credit card, but questions quickly arose about its purported relationship with payment giant Visa. That claim would later be referenced in the SEC's complaint as well as the filings submitted by the Justice Department.

"The claims that Sharma and Farkas made to help secure these investments, however, were false. In fact, Centra Tech had no relationships with Bancorp, Visa, or Mastercard, and at least seven of those 38 states have no record of any such licenses being issued to Centra Tech," officials said in a statement.

Data from CoinMarketCap shows that the token issued through the Central token sale has dropped sharply in value, sliding to less than $0.11 in the past day. Its price had exceeded $4 back in January, market data further shows.

Justice statue image via Shutterstock

This article has been updated for clarity. 

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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