The Feds Charged the Masterminds Behind a DJ Khaled-Endorsed ICO With Fraud

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The Feds Charged the Masterminds Behind a DJ Khaled-Endorsed ICO With Fraud

April 4th, 2018

Awake Goy

On Monday, the US Securities and Exchange Commission (SEC) filed a complaintagainst the masterminds of an initial coin offering (ICO) promoted by the boxer Floyd Mayweather and producer DJ Khaled, charging them with fraud. The founders were separately arrested and charged by law enforcement.

The men in question are Sohrab Sharma and Robert Farkas, 26-year old friends who co-founded a startup called Centra Tech Inc and raised $32 million through an ICO by selling CTR tokens last year. ICOs are run by companies to raise capital by selling investors tokens that are meant to be used with the company’s product. After an unprecedented wave of ICOs raised billions of dollars from investors last year, the practice came under scrutiny by the SEC, which maintains that many ICOs are selling unlicensed securities. In February, SEC head Jay Clayton told a Congressional committee that “every ICO [he’s] seen” is a security, and no ICOs had registered with the regulator at that time.

According to the SEC complaint against Centra Tech, Sharma and Farkas said the ICO funds would be used for building financial services.

“They claimed, for example, to offer a debit card backed by Visa and Mastercard that would allow users to instantly covert hard-to-spend cryptocurrencies into US dollars or legal tender,” the complaint reads. “In reality, the SEC alleges, Centra had no relationships with Visa or MasterCard.”