Court Sentences Centra ICO founder to Eight Years in Jail for Raising Fraudulent $25 Million ICO

The DOJ in New York sentenced Sohrab Sharma, a co-founder of a crypto scam, Centra Tech, to eight years imprisonment. The court also asked the co-owner to forfeit $36 million made from the crypto scam. The operation made more than $25 million from its fraudulent Initial Coin Offering (ICO) scheme announced in 2017 until the government tagged it as a scam. The program’s initiators announced it as a niche company that operates products and services related to cryptocurrencies. It claimed that it had partnered with top card issuers like Visa and Mastercard. It also engaged top celebrities such as Floyd Mayweather, the famous boxer, and DJ Khaled as promoters of the projects to hype the fraudulent scheme and claim legality and attract investors in the crypto community.

The SEC discovered that all the claims were false and the founders, including Farkas and Trapani, were all engaging in fraudulent schemes. Hence, the regulatory authorities filed charges against them. Consequently, Frakas was jailed in 2020 and made to forfeit $347000. His jail term, which was announced on Thursday, will last for a year for participating in a fraudulent ICO program, duping unsuspecting members of the public to the tune of $25 million.

Floyd Mayweather and DJ Khaled were the proponents of the ICO

Furthermore, Floyd Mayweather, the famous boxer, and DJ Khaled, the music producer, were also found guilty by the court for promoting crypto scams. The duo was the first set of persons sued by the US regulatory bodies to promote illicit ICO. Consequently, Mayweather was slammed with a $3000,000 fine, while DJ Khaled was made to pay $100,000 as fines. The court concluded the case on Thursday by sentencing Sharma, the main leader of the group. Before the ruling, he had pled guilty, admitting that he conspired with his partners to perpetrate financial fraud, mail fraud, and deceive unsuspecting public members into commencing Centra coins.

The court judged that the first respondent, Sharma was the mastermind behind the fraudulent scheme aimed at defrauding investors and luring them to part away with their money for positive returns. Sharma deceived investors with the claim that his newly launched scheme partnered with big names in the debit card and finance industry. He also claimed that Centra coin had long-term experience in the industry.

The ICO Industry Has Recorded Too Many Fraudulent Schemes Lately

The judge added that Sharma didn’t invent anything except a phony management team, partnerships, and spurious business proposals to promote his scam and mislead innocent investors falsely. That’s not all. Besides the jail term, the judge ruled that Sharma pay $2000 and be monitored for three years after his release. After that, he was made to forfeit the entire $36 million he made from the ICO. In the meantime, the US regulatory bodies announced that they sold the Ethereum confiscated from the Centra ICO, which amounted to $33 million in January 2021. The money would be paid back to the investors who are now victims of the scheme.

In 2018, the crypto ICO sector that involves offering tokens as a store of value and future currency had its tale of victims. In the said year, a report showed that about 80% of ICOs were fraudulent schemes. Till now, the ICO industry has not been free of such scams. In a related development, the FBI seized about 100,000 Ether which was proceeds of a scam generated by raising money from unsuspecting public. The US Department of Justice will create a remission program through which they will use to compensate the victims of the crypto frauds.