The court sentenced Sohrab Sharma, one of the founders of the cryptocurrency project Centra Tech, to eight years in prison for his leading role in orchestrating an investor fraud scheme totaling $25 million, according to a statement from the U.S. Attorney’s Office for the Southern District of New York.
Sharma pleaded guilty to fraud and deceiving investors in connection with Centra Tech’s token sale, in which undefeated professional boxer Floyd Mayweather and music producer DJ Khaled participated in the promotion.
In December, a court sentenced to one year in prison another organizer of the scam project, Robert Joseph Farcas.
Sharma led the investor fraud scheme, falsely claiming that the startup, of which he is a co-founder, had developed functioning, cutting-edge financial products related to cryptocurrencies. In reality, Sharma’s most notable inventions were fake executives, non-existent business partnerships and licenses that he and his co-conspirators promoted to defraud victims into handing over tens of millions of dollars,
— said prosecutor Ilan T. Graff.
According to prosecutors, around July 2017 Sharma, along with co-conspirators Farkas and Raymond Trapani, founded Centra Tech, which claimed to offer financial products including a cryptocurrency debit card backed by Visa and Mastercard networks.
From July 30 to October 5, 2017, Sharma and his accomplices urged investors to buy the project’s CTR tokens, including through an ICO. In these actions they disseminated false materials in which they claimed:
- Centra Tech boasted an experienced management team, including CEO Michael Edwards, who had more than 20 years in banking and a Harvard master’s degree;
- the company established partnerships with Bancorp, Visa and Mastercard to issue a card;
- it held money-transmission licenses and other approvals in 38 states.
Relying in part on these representations, investors poured more than $25 million into CTR tokens in digital currencies. At times in 2018, the sum was worth as much as $60 million.
In fact, the founders’ claims were misleading: “Michael Edwards” and other members of the firm’s executive team were fictitious, and the company had no partnerships with the listed companies or the licenses claimed.
The U.S. Securities and Exchange Commission (SEC) halted the Centra Tech ICO in 2018. Prosecutors and the FBI confiscated $100,000 worth of ETH recovered from victims.
Earlier this year, the U.S. Marshals Service sold the seized assets for about $33.4 million. These funds, together with other proceeds seized from the scammers, will be used to compensate affected investors.
Earlier in February the SEC charged three founders of the crypto startup Bitcoiin2Gen with an $11.4 million fraud in connection with the ICO, which was promoted by Hollywood actor Steven Seagal.
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