Three founders of Centra Tech, the cryptocurrency firm behind the ICO endorsed by Floyd Mayweather, have been indicted on fraud charges, according to reports emerging this week.
The U.S. Attorney for the Southern District of New York announced that Raymond Trapani, Sohrab Sharma and Robert Farka had all been indicted by grand jury, following accusations that they had intentionally planned to deceive and defraud investors in their ICO.
According to the charges, Centra has been found to be offering “cryptocurrency-related financial products” as part of “a scheme to induce victims to invest millions of dollars’ worth of digital funds for the purpose of unregistered securities.”
The allegations relate to the $60 million Centra ICO, which garnered the backing of a particularly high profile celebrity endorser, in the form of Floyd Mayweather, in encouraging investors to buy CTR tokens.
According to a release on the SEC website originally announcing the charges, the ICO was described as an unregistered security, and the founders “engaged in fraudulent conduct and made material misstatements and omissions designed to deceive investors.”
“The SEC also alleges that to promote the ICO, Sharma and Farkas created fictional executives with impressive biographies, posted false or misleading marketing materials to Centra’s website, and paid celebrities to tout the ICO on social media.”
Amongst some of the claims associated with the CTR Token were descriptions of partnerships with MasterCard and Visa to develop a new range of financial products, powered by the token. However, according to the statements this week, it is alleged that these, as well as many other associated marketing materials, were entirely fabricated.
It is also alleged that the founders failed to disclose important information to investors, as well as a number of other actions amount to the charges of security and wire fraud.
The indictment follows on from charges brought by the Department of Justice against each of the co-founders, following a decision by the SEC to refer the ICO after initial investigations back in April.
Farka, Sharma and Trapani remain in custody for the time being. Their story serves as the latest example of fraudulent activity in the ICO space, and the steps being taken by authorities to bring the perpetrators to justice.