SEC Charges Another Founder of Floyd Mayweather-Backed Cryptocurrency With Fraud

April 20, 2018 9:46 pm Published by
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Another founder of the cryptocurrency firm that was endorsed by boxer Floyd Mayweather was charged with fraud on Friday by the United States Securities and Exchange Commission, according to CNBC.

Centra raised $33 million through a fundraising venture known as initial coin offering (ICO), through which they issued a new digital coin in exchange for money and that coin can either be traded or used on a service provided by the company.

Centra’s co-founder Raymond Trapani was added to an earlier complaint from the SEC which included two other company founders who were carrying out a fraudulent ICO.

“We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology,” Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit said in a statement. “Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”

Boxer Floyd Mayweather was not named in the SEC complaint. 

Social media star and singer DJ Khaled also endorsed the company.

The SEC complaint said that Trapani was the “mastermind” of the plot where Centra allegedly marketed fake business relationships with major credit cards, including Visa and Mastercard, while publishing fictional executive bios and misrepresenting the viability of the products offered by Centra.

Trapani and fellow co-founder Sohrab “Sam” Sharma both propped up the price of the CTR Tokens that were issued by the company. 

The SEC cited text messages between the founders as evidence of the scheme.

After one of the major banks requested the company remove any reference of it from Centra’s marketing materials, Sharma texted the other two founders in the complaint to misplace the blame for the incident.

“[W]e gotta get that s[***] removed everywhere and blame freelancers lol,” Sharma texted, according to the SEC complaint.

Trapani then texted Sharma to tell him to “cook me up” a false document, before Sharma replied to say “don’t text me that s[***] lol. Delete,” according to the SEC complaint.

U.S. regulators have increased their efforts to shut down the fraudulent ICOs this year. 

The SEC also said that it was planning to apply securities laws to cryptocurrency exchanges and wallets. 

SEC head Jay Clayton said that the financial regulator was going to devote a “significant portion of resources” into investigating the ICO market., Maureen Foody

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