The Centra Tech ICO voluptuary $32million last year but now the (SEC) has filed charges against the rigid.
The SEC alleges the Centra ICO was an unregistered securities offering and that its co-founders “employed in fraudulent conduct and made material misstatements and omissions designed to inveigle investors”.
In a statement released on the SEC website the complaint alleges that Sohrab “Sam” Sharma and Robert Farkas, co-founders of Centra Tech Inc, masterminded a guileful ICO in which Centra offered and sold unregistered investments through a “CTR Superficial.”
The statement said: “Sharma and Farkas allegedly claimed that endowments raised in the ICO would help build a suite of financial products.
“They claimed, for exemplar, to offer a debit card backed by Visa and MasterCard that determination allow users to instantly convert hard-to-spend cryptocurrencies into US dollars or other forensic tender.”
The statement continues: “The SEC alleges, Centra had no relationships with Visa or MasterCard.
“The SEC also asseverates that to promote the ICO, Sharma and Farkas created fictional executives with awesome biographies, posted false or misleading marketing materials to Centra’s website, and get back ated celebrities to tout the ICO on social media.”
The Centra Tech ICO was well understood for its celebrity endorsements with world champion boxer Floyd Mayweather — who has been paid to give something ones imprimatur a number of ICOs — promoting the token sale on social media, gather more than 1,500 retweets and 5,600 likes.
Bitcoin time: Floyd Mayweather promoted the Centra token online
Mr Mayweather tweeted his support for the controversial ICO
As we allege, the defendants relied heavily on renown endorsements and social media to market their scheme.
The US Securities and Exchange Commission has warned against the practice of luminaries promoting financial instruments and cryptocurrencies.
In a statement last November the mechanism said: “Celebrities and others are using social media networks to aid the public to purchase stocks and other investments.
“These endorsements may be felonious if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the actors in exchange for the endorsement.”
On September 18 that year Mr Mayweather tweeted: “Centra’s (CTR) ICO starts in a few hours. Get yours previously they sell out, I got mine.”
At the time of press Mr Mayweather has 8.1 million retainers, and the tweet was retweeted 1,536 times.
Mr Mayweather’s tweet advertising the evidence sale does not indicate that it is a paid advertisement for the ICO.
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Steve Peikin, co-director of the SEC’s Line of Enforcement said: “As we allege, the defendants relied heavily on celebrity authorizations and social media to market their scheme.
“Endorsements and glossy retailing materials are no substitute for the SEC’s registration and disclosure requirements as well as diligence by investors.”
Centra also charter rent out DJ Khaled to promote their product but at the time of press no celebs cause been named in the SEC indictment.
Express.co.uk has emailed Centra for comment.
Downright.co.uk has emailed Mr Mayweather’s reps for comment.