Kevin Helms: US Court Indicts Founders of Crypto Company for Fraudulent Scheme

virtual-currency us tokens news n-economy initial-coin-offering indictment ico fraud federal-court doj digital-currency department-of-justice cryptocurrency crypto centra-tech centra-card btc bitcoin

US Court Indicts Founders of Crypto Company for Fraudulent Scheme

A US federal court has indicted three founders of a company purported to offer cryptocurrency-related financial products and have raised $25 million in an initial coin offering. In addition to claiming to have licenses in 38 states, the company also claimed partnerships with Bancorp, Visa, and Mastercard to issue its own cards.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Three Founders Indicted

The US Department of Justice (DOJ) announced on Monday that the founders of a cryptocurrency-related company have been indicted in the Manhattan federal court.

US Court Indicts Founders of Crypto Company for Fraudulent SchemeFlorida residents Sohrab Sharma, 27, Raymond Trapani, 27, and Robert Farkas, 31, are co-founders of a startup called Centra Tech. The company purported to offer cryptocurrency-related financial products including the Centra Card, a debit card which supposedly “allowed users to spend various types of cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard payment cards,” the DOJ described.

The three were arrested last month. The US Attorney’s Office of Southern District of New York and the Federal Bureau of Investigation (FBI) seized 91,000 ether which was “raised from victims as part of the charged scheme” in an initial coin offering (ICO).

The attorney for the United States, Robert Khuzami, explained:

As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO. Whether traditional or cutting-edge, investment vehicles can’t legally be peddled with falsehoods and lies.

ICO Worth $60+ Million

US Court Indicts Founders of Crypto Company for Fraudulent SchemeThe three began “soliciting investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech” through an ICO in approximately July. In oral and written materials, they falsely represented that Centra Tech had an experienced executive team and “had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard.” They also represented that the company “had money transmitter and other licenses in 38 states, among other claims,” the DOJ revealed, adding:

Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens.

“In or about October 2017, at the end of Centra Tech’s ICO, those digital funds raised from victims were worth more than $25 million” – the amount which has now appreciated to more than $60 million.

False Statements

US Court Indicts Founders of Crypto Company for Fraudulent SchemeThe Department of Justice found that statements made by the three to secure these investments “were false,” emphasizing that the three “were well aware of the falsity of such claims.”

For example, “the purported CEO ‘Michael Edwards’ and another supposed member of Centra Tech’s executive team are fictitious people who were fabricated to dupe investors.”

The DOJ then described the scheme used to fabricate the CEO and another executive:

Sharma text-messaged Trapani on or about July 29, 2017, that they ‘Need to find someone who looks like Michael’…Similarly, Sharma later wrote during that same exchange: ‘Gonna kill both CEO and her [another executive],’ ‘Gonna say they were married and got into an accident.’

Furthermore, the company’s claimed partnerships and licenses were non-existent, the DOJ revealed, citing text messages between Trapani and Sharma discussing “Centra Tech’s lack of actual partnerships with banks or credit card companies.” Another text message from Sharma to Trapani and Farkas says, “Gotta apply for all licenses,” “Should I even say this.”

Four-Count Indictment

According to the Justice Department’s announcement:

All three of them are charged in a four-count Indictment.

One count is “conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison.” The other three carry “a maximum potential sentence of 20 years in prison.” They are securities fraud, conspiracy to commit wire fraud, and wire fraud. Additionally, each charge also carries potential financial penalties. “The maximum potential prison sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge,” the DOJ wrote.

Moreover, the US Securities and Exchange Commission (SEC) has separately filed civil charges against the trio.

What do you think of the DOJ indicting the three Centra Tech’s founders? Let us know in the comments section below.

Images courtesy of Shutterstock, Twitter, and the DOJ.

Need to calculate your bitcoin holdings? Check our tools section.

The post US Court Indicts Founders of Crypto Company for Fraudulent Scheme appeared first on Bitcoin News.

Original article was created by: Kevin Helms at news.bitcoin.com

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency or ICO.

Interested in Cryptocurrencies and ICO's?

Follow our telegram channel for daily cryptomarket reports!

Join @cointrends

Related Articles

pubDate Newsline
1 week ago From Hive Project to Hiveterminal: The New Brand Unveiled!
1 week ago Win $100 of Bitcoin Cash in Bitcoin.com’s Paper Wallet Design Contest
1 week ago The Daily: Kanye Teaches Opsec, Crypto Foes Join Forces
1 week ago Funny New Advert Shows Bitcoin Is on Google’s Mind
1 week ago BANKEX Monthly Update: September 2018
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
1 week ago Nigerian Startup Kubitx Launches Bitcoin Exchange in Beta
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
2 weeks ago Bitpay Phases Out Crypto-Debit Cards for European Cardholders
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
2 weeks ago Venezuela Makes Petro Crypto a National Currency, Publishes New Whitepaper
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
1 week ago Funny New Advert Shows Bitcoin Is on Google’s Mind
1 week ago Largest South Korean Exchange Launches Crypto Market Indices
1 week ago FSB: Crypto-Assets Not a Threat to Global Financial Order
1 week ago Hundreds of ICOs Being Secretly Investigated by SEC, Claims Report
1 week ago Progress Report: devcon4 and the launch’s preps
2 weeks ago North Dakota Issues Orders Against Bitconnect, Magma, Pension Rewards
3 weeks ago Payments Platform Wirex Launches Iban for Spanish and French Users, Doubles Account Limits
3 weeks ago Bad Cryptocurrency Projects Have Squandered Millions of Dollars
1 month ago More Banks Sanctioned for AML, Fraud-Related Violations
3 weeks ago Google Bringing Back Crypto Ads in US and Japan
1 month ago Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin
4 weeks ago The Bitcoin Files Protocol Provides a BCH Secured File Storage System
1 month ago PR: iCoinbay Rolls Out Trading Premium Gain Plan
1 month ago DOJ Special Agent Empathizes With Bitcoin Adoption in Venezuela
2 months ago US Judge Orders Alleged Hacker to Pay Bail in Cryptocurrency
2 months ago US Judge Orders Alleged Hacker to Pay Bail in Cryptocurrency
2 months ago US Court Seizes 81 BTC, Sends Bitcoin Trader to Jail for 41 Months for Money Laundering
4 months ago Canadian Accused of Assisting Ross Ulbricht Extradited to U.S.
3 months ago ICO Round-Up: Social Media Influencers Bypass Ad Ban, Centra Tokens Deemed Securities

Stay on top of Altcoins and ICO trends.

Subscribe to our free Weekly Cryptomarket report

Delivered once a week, strongly to your inbox.

Subscribe to our mailing list
October 12, 2018

Win $100 of Bitcoin Cash in Bitcoin.com’s Paper Wallet Design Contest

Over the next few weeks, Bitcoin.com is hosting a paper wallet design contest to create a beautiful cold storage visual graphic for bitcoin enthusiasts around the world. The competition is open to everyone and the winning entry will receive $100 worth of bitcoin cash. Also Read: Bitcoin.com...

From: Bitcoin.com

The Daily: Kanye Teaches Opsec, Crypto Foes Join Forces

The last 24 hours has been one of those all-too-rare periods in which the cryptosphere unites against a shared enemy. We’ll detail who in The Daily, right after we’ve discussed blockchain spam, Blockfolio’s new funding round, and how we learned an opsec lesson from Kanye West. Also...

From: Kai Sedgwick

US Court Issues Emergency Order Halting a Planned Initial Coin Offering

An American court has put a stop to an initial coin offering (ICO) by a company claiming to offer “the first licensed and regulated tokenized crypto currency exchange & index fund based in the US.” The ICO promoters even invented their own regulatory authority, which seems to...

From: Avi Mizrahi

Largest South Korean Exchange Launches Crypto Market Indices

The largest crypto exchange in South Korea by trading volume, Bithumb, has launched two cryptocurrency market indices. One tracks all coins listed on the exchange while the other tracks only altcoins. Meanwhile, Upbit, the country’s largest crypto exchange by the number of coins listed, has...

From: Kevin Helms

Funny New Advert Shows Bitcoin Is on Google’s Mind

Google, which currently sits on the fence with regard to cryptocurrency, took an opportunity to throw shade at digital coins like bitcoin core and bitcoin cash during an advert for its new call-screening feature. In the minute-long segment, popular comedians dressed as Google employees mock...

From: Jeffrey Gogo

Facebook Purge Continues: 559 Pages, 251 Accounts Removed Ahead of US Elections

Facebook’s Nathaniel Gleicher, Head of Cybersecurity Policy, and Oscar Rodriguez, Product Manager, announced that “Today, we’re removing 559 pages and 251 accounts that have consistently broken our rules against spam and coordinated inauthentic behavior.” It is another decision to purge...

From: C. Edward Kelso
Upcoming ICO's
This week overview
Token Name Starts
Spotcoin (SPOT) logo Spotcoin (SPOT) 1 days
CoTrader (COT) logo CoTrader (COT) 2 days
Bountie (BNTE) logo Bountie (BNTE) 5 days
Cryptocurrency rates
*Last hour average price&change
Coin Name Price Hour
Bitcoin logo BTC $6482.34812955 -0.52%
Ethereum logo ETH $205.010743159 -0.24%
Ripple logo XRP $0.4565345025 -0.18%
Bitcoin Cash logo BCH $447.383379013 -0.32%
EOS logo EOS $5.4155798531 -0.15%
Stellar logo XLM $0.2416220308 -0.03%
Litecoin logo LTC $52.8605696932 -0.18%
Tether logo USDT $0.9834510785 -0.12%
Cardano logo ADA $0.0757993022 -0.19%
Monero logo XMR $105.005391612 -0.26%
Tronix logo TRX $0.0241800733 -0.21%
IOTA logo IOT $0.4921883246 -0.06%