The Founder of cryptocurrency firm Centra Tech was sentenced 7 years jail for $25 million ICO scam
A cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a digital ledger or computerized database using strong cryptography to secure transaction record entries, to control the creation of additional digital coin records, and to verify the transfer of coin ownership. It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.
Robert Farkas, the founder of cryptocurrency firm Centra Tech, which raised more than $25 million from its initial coin offering scam, pled guilty in a federal court in Manhattan on Tuesday.
Farkas was pled guilt to commit securities and wire fraud in connection with a scheme to induce victims to invest more than $25 million dollars’ worth of digital funds in Centra Tech. Centra Tech is a Miami-based company he co-founded and that purported to offer cryptocurrency-related financial products.
FARKAS and his co-conspirators used material misrepresentations and omissions to solicit investors to purchase securities, in the form of digital tokens issued by Centra Tech, through an initial coin offering (“ICO”) beginning in approximately July 2017.
The company promised to launch a “Centra Card” that could be used to pay in cryptocurrencies to all merchants accepting Visa or Mastercard payment cards. However, it was later found that they had never formed a partnership or licensed with either of the two payment companies.
As part of this effort, FARKAS and his co-defendants represented, in oral and written offering materials that were disseminated via the internet: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; (b) that Centra Tech had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard; and (c) that Centra Tech had money transmitter and other licenses in 38 states, among other claims.
a press release stated
Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens. The claims that FARKAS and his co-conspirators made to help secure these investments, however, were false.
FARKAS, 33, pled guilty to one count of securities fraud conspiracy and one count of wire fraud conspiracy, each of which carries a maximum sentence of five years in prison.
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