Disgraced founder of crypto firm Centra Tech, Robert Farkas, pleaded guilty to a $25M ICO scam in a Manhattan federal court on Tuesday. 

Farkas was accused of conspiring to commit securities and wire fraud, and will likely be sentenced to between 70 and 87 months in jail and a fine of up to $250,000. District Judge Lorna G. Schofield will hand Farkas his specific sentence at a date to be determined.

Miami-based Cetra Tech was run by Farkas and co-founders Sohrab Sharma and Raymond Trapani – both of whom are awaiting trials set for November this year. 

In an official statement, Craig Stewart, from the US Attorney’s Office, Southern District of New York, said:

“Farkas and his co-conspirators duped ICO investors into investing digital currency worth millions of dollars based on fictitious claims about their company, including misrepresentations relating to its purported digital technologies and its relationships with legitimate businesses in the financial services sector.  Whether in the context of traditional equity IPOs or newer cryptocurrency-related ICOs, raising capital through lies and deceit is a crime.”

Centra Tech: misrepresented facts and lied from the start

Authorities say Centra Tech’s business model was based on misrepresented facts and lies about the core team members, and that its ‘Centra Card’ Visa and Mastercard project was a fraud – with the company never having any partnerships or licenses from either of the global payment companies. 

Apparently the trio even created a fantasy CEO, named ‘Michael Edwards.’ The fictitious CEO was said to have graduated from Harvard University with a Master’s in business administration, and to have two decades of banking experience under his belt. 

As if all that wasn’t enough, Centra Tech also fraudulently claimed to possess money transmitter licenses in no less than 38 states. 

Fraudulent ICO endorsed by celebrities

The lies were designed to dupe investors to participate in the firm’s initial coin offering (ICO), which ran from July to October 2017, and was backed by high-profile celebrities including Floyd Mayweather and DJ Khaled – both of whom were later charged for unlawfully promoting crypto coin offerings without making it clear they had been paid to do so. 

Mayweather, who was also involved with two other ICOs, was forced to cough up $300,000 in disgorgement, a $300,000 fine, and around $15,000 in prejudgement interest. Whole DJ Khaled was made to pay $50,000, plus a $100,000 fine, and $3,000 in prejudgment interest. 

The investigation into Centra Tech involved the US Department of Justice’s Securities and Commodities Fraud Task Force, the US Securities and Exchange Commission, and the Federal Bureau of Investigation (FBI). 

AYO.NEWS says:

Slowly but surely US authorities are catching up with the cowboys that gave the ICO scene such a bad name a few years ago. Those who brazenly thought they were above the law are now going to be spending a lot of time looking at their cell walls. Unfortunately, the damage these crooks did to the industry’s reputation will take a long time to repair. 

Staying with crypto crime, as we reported last month, Seychelles-based cryptocurrency derivatives exchange BitMEX, and its executives, are facing a lawsuit for alleged racketeering, money laundering, wire fraud, and unlicensed money transmission. 

‘AYO.NEWS says’ features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited or its affiliates or associates. 

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