On April 2, 2018, Sohrab “Sam” Sharma and Robert Farkas, co-founders of Centra Tech, Inc. were arrested and charged with violation of the anti-fraud and registration provisions of the U.S. securities law committed during the ICO that raised $32 million in 2017.
In its complaint
, the SEC alleged that Centra co-founders orchestrated a scheme, which involved offering and sale of unregistered securities (CRT tokens), to purportedly build a variety of financial products. The ICO of CRT tokens was heavily promoted on social media, including endorsements from celebrities. The company also claimed partner relationships with Visa and MasterCard, which were to allow Centra offering debit cards to token holders and ability to instantly convert cryptocurrencies into U.S. dollars.
"We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. As the complaint alleges, these and other claims were simply false.
As in many similar cases brought by the SEC before, the SEC is seeking permanent injunctions, disgorgement plus interest and penalties, and also to bar Sohrab “Sam” Sharma and Robert Farkas from serving as officers or directors of the public company as well as from participating in any offer of securities in the future.
In addition, the U.S. Attorney’s Office of the Southern District of New York brought criminal charges against the co-founders of Centra.