ICO Centra was found to be fraudulent by the U.S. Securities and Exchange Commission and the Department of Justice. The ICO was promoted by boxing star Mayweather and gained global exposure because of his star power.
Centra Tech was able to raise $32 million through an ICO in September 2017 which gained mainstream popularity as Mayweather endorsed the launch on his official Instagram page.
Raymond Trapani, the mastermind behind the ICO, was charged with a case of fraud on Friday by SEC. It was the third time a case was filed by SEC over the Centra ICO related issue.
According to the SEC, at least three characters were included in the creation of Centra ICO, but Raymond Trapani was the main initiator of the fraud. Earlier in April SEC charged two more people for their involvement in the scheme named Sohrab “Sam” Sharma and Robert Farkas.
Three frauds promoted the ICO by claiming that they were backed by Visa and MasterCard.
Between July 2017 and March 2018, the trio requested investors to purchase tokens in the upcoming Centra ICO. The fraudsters claimed to have developed Centra Card, similar to a debit card. This card holds the crypto values of its user, and it can be used to make payments anywhere Mastercard and Visa were accepted.
They also convinced the investors about having all the legal certificates including a financial servicing license from Mastercard and Visa in 38 states. The Centra ICO was able to raise $25 million in the first round that rose to a total of $32 million.
The charges filed against Trapani amended the acquisitions laid on Farkas and Sohrab. As per the new charges, Sharma and Trapani altered trading activities in the CTR tokens to lure investors in their company and increase the price of their tokens.
Chief of the SEC Enforcement Division’s Cyber Unit, Robert A. Cohen, said, “We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology. Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”
Trapani has been specifically charged with violating the anti-fraud and registration provisions of the federal securities laws. The new charges include permanent injunctions, the reimbursement of gains to investors including interest and penalties. It asks the authority to ban him from his rights to serve as a public company officer or director. He should also not indulge in any digital or traditional offering.
Similarly, the U.S. Attorney’s Office for the Southern District of New York has also launched criminal charges against him.
It will be interesting to see if Mayweather comes out with an apology for backing a fraud ICO launch and information about his involvement with the company. The incident has served as a reminder to both celebrities and the general public to take every ICO with a grain of salt. Several cybercriminals are now luring investors using popular media figures. A similar fraud was unveiled in India last month.