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The United States Securities and Exchange Commission (SEC) has laid charges against the initial offer of coins from Centra Tech on Monday. alleging that the symbolic sale – which was promoted by legendary boxer Floyd Mayweather – was a fraudulent offer of securities.

SEC interrupts ICO, accuses the founders of fraud

The SEC’s complaint alleges both that Centra ICO was an unrecorded offer of securities and that its co-founders “behaved fraudulently and made material misstatements and omissions to mislead investors”.

The Miami-based company – founded by Sohrab “Sam” Sharma and Robert Farkas – raised $ 32 million through an ICO last year.

According to the SEC, Centra lied about its relationships with major financial institutions – including Visa, Mastercard and Bancorp – which sent Centra many letters of termination and abstention

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In addition, many of the executives featured in Centra promotional material were fictitious.

“We affirm that Centra has sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to deceive their so-called partnership with legitimate businesses,” said Stephanie Avakian, co-director of the SEC Application Division. “As the complaint alleges, these claims and others were just plain wrong.”

The SEC initially assigned Centra in February, probably as part of its extensive investigation of ICOs.

The complaint stated that Sharma and Farkas were arrested on April 1, after the company’s bank accounts had been cleared; Farkas, incidentally, was trying to board a flight leaving the country.

Centra ICO relies on confessions of celebrities

Centra ICO is perhaps best known for its use of celebrity endorsements to promote its product. Legendary boxing champion Floyd Mayweather – who has made advances paid for several ICOs – has promoted the sale of chips on social media, garnering more than 1,500 retweets and 5,600 likes.

<img class=”size-full wp-image-134022″ data-size=”560×729″ src=”https://businessdigit.com/wp-content/uploads/2018/04/1522764813_791_knockout-sec-accuses-ico-supported-by-floyd-mayweather-of-fraud.jpg” alt=” floyd mayweather “width =” 560 “height =” 729 “/>
Source: Twitter / Floyd Mayweather

In addition to Mayweather, Centra hired DJ Khaled to promote the ICO, even though none of the celebrities has been named in the indictment.

“As we have argued, the defendants relied heavily on celebrity endorsements and social media to commercialize their program,” said Steve Peikin, co-director of the Division of Enforcement’s the SEC. “Endorsements and glossy marketing documents can not replace the registration and disclosure requirements of the SEC as well as the diligence of investors.”

Notably, the SEC has warned that these celebrity ICO endorsements may be illegal if the parties do not make the necessary public disclosures. The Mayweather tweet announcing the sale of chips, for example, does not indicate that it is a paid advertisement.

Image from Shutterstock to photo

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