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.

One more thing you may be interested in:

Interested in Cryptocurrencies and ICO's?

Follow our telegram channel for daily cryptomarket reports!

Join @cointrends

Related Articles

pubDate Newsline
3 minutes ago Tezos Community Petitions to End the Class Action Lawsuits
8 hours ago A Gimmer Guide: How to Purchase ETH
1 hour ago Coinjar Launches Cryptocurrency Exchange Supporting AUD Pairings
4 hours ago Zimbabwe High Court Reverses Central Bank’s Cryptocurrency Ban
1 hour ago Coinjar Launches Cryptocurrency Exchange Supporting AUD Pairings
3 hours ago Pangborn Development Site VI
1 hour ago Coinjar Launches Cryptocurrency Exchange Supporting AUD Pairings
7 hours ago Ireland Clarifies Taxation of Crypto Transactions
3 hours ago BCH Payment Processor Bitek Allows Colombian Merchants to Convert to Pesos
4 hours ago Zimbabwe High Court Reverses Central Bank’s Cryptocurrency Ban
3 hours ago Pangborn Development Site VI
7 hours ago Ireland Clarifies Taxation of Crypto Transactions
4 hours ago Zimbabwe High Court Reverses Central Bank’s Cryptocurrency Ban
5 hours ago Important Announcement: SDK and Core contracts audit is finished
9 hours ago US Justice Department Investigates Price Manipulation in Bitcoin Market
9 hours ago US Justice Department Investigates Price Manipulation in Bitcoin Market
9 hours ago US Justice Department Investigates Price Manipulation in Bitcoin Market
2 days ago 70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes
18 hours ago Russian Duma Adopts Three Crypto Bills on First Reading
1 day ago Overstock.com’s t0 to Launch Regulated Security Token Exchange
1 day ago South Korean Crypto Exchange Korbit Drops XMR, ZEC, DASH, REP, and STEEM
1 day ago Overstock.com’s t0 to Launch Regulated Security Token Exchange
3 days ago Onchain Capital Founder Bullish on BCH and ETH
1 day ago Overstock.com’s t0 to Launch Regulated Security Token Exchange
1 day ago South Korean Crypto Exchange Korbit Drops XMR, ZEC, DASH, REP, and STEEM
2 days ago 70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes
2 days ago Crypto Scams Comprise 0.6% of Fraud – Australian Consumer Watchdog
2 months ago US Court Shuts Down Promoters of Three Deceptive Crypto Schemes

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
May 25, 2018

Tezos Community Petitions to End the Class Action Lawsuits

Tezos was conceived as a governance-based blockchain to rival Ethereum, but it’s become more synonymous with protracted legal battles and internecine conflict. As the latest class action lawsuit drags its way through the courts, the Tezos community has petitioned for an end to all the legal...

From: Kai Sedgwick

Coinjar Launches Cryptocurrency Exchange Supporting AUD Pairings

Coinjar has announced the launch of a cryptocurrency exchange that will exclusively offer AUD currency for fiat pairings. The exchange currently offers AUD and BTC pairings for bitcoin, Ethereum, Litecoin, and Ripple. Also Read: US Justice Department Investigates Price Manipulation in Bitcoin...

From: Samuel Haig

BCH Payment Processor Bitek Allows Colombian Merchants to Convert to Pesos

Two Bitcoin Cash (BCH) proponents, Javier Barrera and Andrés Rivera, believe the evolution of cryptocurrency will be bolstered by the BCH network so they recently developed a payment processor called Bitek.co. The company offers merchant processing with payable invoices, and accounting services...

From: Jamie Redman
May 24, 2018

Zimbabwe High Court Reverses Central Bank’s Cryptocurrency Ban

Just recently news.Bitcoin.com reported on the Zimbabwe-based exchange Golix filing a lawsuit over the recent Reserve Bank of Zimbabwe (RBZ) ‘cryptocurrency ban’ that was issued in a financial guidance circular earlier this month. Now, according to numerous regional reports, the Zimbabwe...

From: Jamie Redman

Bitcoin Gold Hacked for $18 Million

It appears Bitcoin Gold (BTG) has been double spend attacked over and over again, totalling something in the neighborhood of $18 million at current prices. BTG forums seem to have been tracking the hack, going as far back as last week, monitoring the controversial coin’s hashrate, ultimately...

From: C. Edward Kelso

Ireland Clarifies Taxation of Crypto Transactions

The Irish revenue service has published a manual with guidelines aimed at eliminating the uncertainty surrounding the taxation of crypto transactions. Investors and traders of digital coins, businesses working with cryptocurrency and tax advisors, of course, can now find answers to many but not...

From: Lubomir Tassev
Upcoming ICO's
This week overview
Token Name Starts
Acorn Collective (OAK) logo Acorn Collective (OAK) 1 days
Tradelize (TDZ) logo Tradelize (TDZ) 4 days
Scanetchain Token (SWC) logo Scanetchain Token (SWC) 4 days
Kepler (KEP) logo Kepler (KEP) 4 days
Bettium (BETT) logo Bettium (BETT) 7 days
DNN Token (DNN) logo DNN Token (DNN) 7 days
Gimmer (GMR) logo Gimmer (GMR) 7 days
Mint (MNTS) logo Mint (MNTS) 7 days
Cryptocurrency rates
*Last hour average price&change
Coin Name Price Hour
Bitcoin logo BTC $7639.55 0.67%
Ethereum logo ETH $605.591 0.92%
Ripple logo XRP $0.63489 0.66%
Bitcoin Cash logo BCH $1068.87 0.93%
EOS logo EOS $12.6766 1.77%
Litecoin logo LTC $123.129 0.65%
Stellar logo XLM $0.297391 1.8%
Cardano logo ADA $0.210158 1.51%
Tronix logo TRX $0.0729561 0.45%
IOTA logo IOT $1.53341 0.93%
NEO logo NEO $55.9326 2.84%
DigitalCash logo DASH $346.324 0.87%