Centra ICO Founders Busted!

The SEC Walks The Walk

ICOs have raised millions of dollars over the last two years and showed little by way of results. The ease with which money was being raised and the rate at which people were getting scammed drew the attention of authorities. The Securities and Exchange Commission (SEC) of the United States is not relenting on its quests to clamp down on fraudulent Initial Coin Offerings. Some ICO teams have been ordered to close down their projects because they violated certain regulations. The abandoned Bitcoiin ICO is one such project. This time it’s not just a cease and desist order. Sohrab Sharma and Robert Farkas, founders of the Centra ICO, have been picked up by the authorities.

In a 2nd April 2018 statement by the SEC, Centra ICO, which raised over 30 million dollars was qualified as fraudulent. According to them, the Centra (CTR) tokens were unregistered. This makes the sale of CTR tokens to the general public unlawful. Two of Centra’s three founders, Sohra Sharma and Robert Farkas, were arrested prior to the release of the SEC’s statement. The two do not have only the SEC to worry about. They have also been charged with securities fraud and wire fraud amongst others by the Southern District of New York.

According to the SEC, Mr Farkas was arrested just before he could get onboard his scheduled flight out of the United States on Sunday.

Centra ICO Was Allegedly Promoted Using Lies

Centra advertised that users would be issued debit cards to enable users to convert their crypto assets to easy to spend fiat currency. These debit cards were to be backed by Visa and Mastercard. It turns out the ICO project had no partnership or connections to either Visa or Mastercard. At least this is what the SEC believes.

The SEC also accused the two founders of creating a fake executive team. Sharma and Farkas are said to have created fictional team members with good track records.

Celebrities were also used to promote the ICO on social media platforms. Celebrity endorsements of ICOs is something the SEC has previously sent out warnings on. Such endorsements are considered illegal if there is no full disclosure in terms of the role played by the celebrities and if they are paid to promote the project. Famous boxer, Floyd Mayweather Jr. endorsed the Centra ICO without any such disclosures.

The Future Of ICOs

The downside of being the face of any cryptocurrency project is that you get a visit from authorities if they think something isn’t right with the project. Are we going to see a slow down in the number of ICOs springing up  due to arrests like this? In my opinion, developments like this would make it more difficult to raise money through ICOs. It would also scare away people simply trying to steal money. In the end, we should have less scams and more ICOs serving real purposes.

The SEC also called on Centra ICO investors, who think they might be victims, to reach out to them at www.SEC.gov/tcr. What are your thoughts on this issue? Are interventions like this from authorities welcome in the space? Should investors be protected or expected to be responsible for their actions? Let’s continue the discussion in the comments.