The co-founder of a digital currency scam that bilked $32 million from investors has pleaded guilty to fraud. Robert Farkas, founder of Centra Tech, will have his day in court next week.
Farkas faces charges of securities and wire fraud for his role in the ICO scam. Together with his fellow co-founder Sohrab Sharma, he raised over $32 million from investors. The two sold worthless tokens after luring investors with fake deals and partnerships as well as celebrity endorsements.
Farkas has agreed to take a plea deal, Law360 reports. According to the report, Farkas’ lawyers presented the request to U.S District Judge Lorna Schofield who has scheduled the hearing for next week. The court has withheld the details of the plea deal.
The cases against the two co-founders are set to resume in September due to the coronavirus lockdown.
Centra Tech was one of the several digital currency startups that sprung up in 2017 to take advantage of the ICO hype. The company sold CTR tokens, telling the investors that the funds would go towards building a suite of financial products for the digital economy.
They also lied about securing partnerships with some of the largest financial services companies in the world. In one instance, they claimed to partner with VISA and Mastercard on a debit card that would instantly convert digital currencies to fiat for easy payments. The two financial giants later came to refute the claims.
Their biggest tool, however, was celebrity endorsements. Centra Tech was able to bring in boxing champion Floyd Mayweather Jr. and renowned record producer DJ Khaled for endorsements. This led to a successful ICO that took place between July 2017 and March 2018.
Shortly after the ICO’s conclusion, the SEC charged the two founders with conducting a fraudulent ICO. This was the beginning of the end for the startup, with Mayweather and DJ Khaled also facing lawsuits for misleading investors. The two promoted the ICO on social media, and many investors blamed them for the money they lost in the venture.
The two celebrities escaped the repercussions from the lawsuit, getting away with a fine and disgorgement of ill gains.
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