The Centra Tech ICO disaster has finally resulted in a verdict for one of the founders, with the others still to be tried.
Robert Joseph Farkas, co-founder of crypto startup Centra Tech, which raised more than $25 million in an initial coin offering (ICO) in 2017, pleaded guilty today to conspiring to commit securities and fraud.
Centra Tech . Fraud Scheme
Miami-based Centra Tech employs celebrities such as boxers Floyd Mayweather and DJ Khaled to peddle its ICO, which promises to develop a “Centra Card” that can be used in VISA and Mastercard terminals to make payments via cryptocurrency holdings.
However, it was all a massive fraud scheme, according to the US Federal Bureau of Investigation (FBI). The agency determined that Centra Tech created non-existent individuals for its executive team, including CEO “Michael Edwards,”. That the company has never had a relationship with Bancorp, VISA, or Mastercard, or licenses in the many states it claims. .
“Farkas and his co-conspirators tricked ICO investors into investing millions of dollars in digital currency based on fictitious claims about their companies, including misrepresentations relating to purported digital technologies and their links to legitimate businesses in the financial services sector,” the United States said. attorney Craig Stewart in a statement. “Whether in the context of a traditional equity IPO or a new cryptocurrency-related ICO, raising capital through lies and deception is a crime.”
According to the Justice Department, the FBI confiscated 100,000 Ethereum between May and October 2018, including funds obtained from investors fraudulently.
The 33-year-old Farkas pleaded guilty to two counts, each of which carries a maximum sentence of five years in prison. The date of his sentencing has not been announced. According to Bloomberg, Farkas agreed to a plea agreement that calls for a sentence of between 70 and 87 months and a fine of up to $250,000.
In May 2022, the co-founders of Centra Tech hoped to end the government’s case by claiming that he illegally confiscated a privileged Slack conversation with their attorney. However, as stated in today’s plea, it was definitely not the life expectancy they had hoped for—at least for Farkas. His partners, Sohrab Sharma and Raymond Trapani, are scheduled to stand trial in November.