A cryptocurrency that in the past has been promoted by the likes of Floyd Mayweather Jr. and DJ Khaled has been deemed fraudulent and is being investigated by the US Securities and Exchange Commission for costing investors millions.
Among the multitude of firms that Bitcoin's success recently inspired to begin issuing ICOs (Initial Coin Offerings) was Centra Tech. Inc. Co-founded by Sohrab "Sam" Sharma and Robert Farkas, the start-up was able to pool thousands of people looking to put their money into virtual currency--by promising that the funds raised by their ICO would contribute to building a suite of financial products. One of the ideas that were presented to investors, for example, was the creation of a debit card that converts coins into legal tender.
Sharma and Farkas are estimated to have duped contributors out of more than $32 million. In a statement that has been released to the press, the SEC notes that Centra Tech. relied on a sophisticated marketing campaign to sell its unregistered CTR Token.
"The defendants relied heavily on celebrity endorsements and social media to market their scheme," co-director of the SEC's Division of Enforcement, Steve Peikin, stated. The celebrities recognized for having touted the initiative are not accused of taking part in the scheme.