New York Federal Court Passes Jail Sentence on Centra Tech’s CEO

Another Initial Coin offering (ICO) scam has bitten the dirt, as law enforcement agencies continue to find success with cracking down on these fraudulent schemes. The latest in the long line of scam ICO projects to meet its fate is Centra Tech, an alleged tech company that scammed investors out of millions, years ago. 

Centra Tech’s Elaborate Fraud

Earlier today, a federal court in Manhattan sentenced the company’s founder, Robert Farkas, to prison as part of the ongoing dissolution of the firm. Per a press release, Farkas had been facing charges of conspiring to commit securities and wire fraud. He was sentenced to 70 to 87 months in prison and slapped with a $250,000 fine.

Farkas launched his company in Miami with two of his partners – Sohrab Sharma and Raymond Trapani. The company was built on lies, as it misrepresented even the most basic facts – what it did, its core team members, etc. It promised to launch a “Centra Card” that would allow people to make crypto payments at any outlet or merchant that accepts MasterCard and VISA payment cards.

The company’s founders also falsely represented the firm’s chief executive, who they claimed was named Michael Edwards. They told investors that Edwards was a Harvard University alumnus with over two decades of experience in the banking industry and a master’s in business administration.

At the same time, they employed some aggressive marketing tactics to sell their scam. Most notably, they enlisted celebrities – boxing legend Floyd Mayweather Jr. and hip-hop artist DJ Khaled. After the company’s ICO held in 2017 and successfully swindled investors of $25 million, its secret came out, and it faced a civil suit from the Securities and Exchange Commission (SEC).

The founders were rounded up, while Khaled and Mayweather faced a lawsuit from the SEC over their role. The celebrities eventually settled with the regulatory body. Mayweather paid $300,000 in disgorgement, about $15,000 in prejudgment interest, and another $300,000 in civil penalties. Khaled, however, paid about $153,000 in total fees.

Getting Tough on Crypto Fraud

The date for Farkas’ sentencing has yet to be announced. As for his partners, both will face trial this November. Regulators and investors have been particular about fishing out fraudulent investors lately. This month, police in India identified five people who they suspected of being involved in a crypto scam that has been operating since 2017.

Per a report from the New Indian Express, the five people had been booked for defrauding investors under the guise of a crypto investment firm. The group promised high returns to those who “invested” crypto assets with them, soliciting payments in cheques and cash. However, like all scams, the firm’s officials started becoming hard to reach once they got the money.

In South Africa, investors in local crypto firm VaultAge Solutions have also announced that they plan to sue the company’s chief executive, Willie Breedt, for scamming over 2,000 of them to the tune of $17 million. The fraudster is reported to have left the country for Mozambique in December 2019 and hasn’t returned since then.

The company had promised crypto investments despite not being registered by South Africa’s Financial Services Conduct Authority. After fleeing the country, he reportedly cut ties with investors and emptied his bank account.