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SEC to file charges against Centra Co-Founder for Its Controversial ICO

SEC to File Charges against Centra Co-Founder for Its Controversial ICO

Securities and Exchange Commission (SEC) of the United States disclosed that it filed charge sheet against Raymond Trapani. He is a co-founder of Centra Tech that is involved in the controversial initial coin offering (ICO). He is also the third founder to face the music from the regulators. The regulator has already found two founders guilty of committing fraud and arrested earlier this month. The arrests and charges come amidst tightening of regulations in the Americas.

Charges Based On Investigations

The filing of charges against the final and third co-founder meant that the regulator was convinced about its investigations. The SEC was inquiring into the $32 million controversial ICO following complaints and doubts. Trapani is now facing charges for his involvement in the fraudulent scheme in respect of the company’s last year ICO. Earlier this month, Sohrab ‘Sam’ Sharma and Robert Farkas, two other co-founders, were charged for their involvement in CTR tokens distribution to investors. The company hit headlines last year after bringing in Floyd Mayweather and DJ Khaled, two celebrities, for endorsements.

The SEC’s changed version accused Trapani as the ‘mastermind of Centra’s fraudulent ICO,’ according to news.bitcoin. The regulator charged Centra of marketing its ICO with false claims. This included fictional executive resumes, non-existent business alliance with big credit card firms, and misrepresentations. The company failed to offer any viability of its core financial services products. Therefore, the SEC accused founders, Trapani and Sharma, of manipulating CTR tokens. Their objective is to spike interest in the firm and support the digital tokens price.

Anti-Fraud provisions

The revised complaint blamed Trapani for violating the registration and anti-fraud regulations of federal securities laws in the United States. The regulator sought “permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, as well as bars against Trapani prohibiting him from serving as a public company officer or director and from participating in any offering of digital or other securities.” The SEC thinks that the co-founders went out of the way to establish false impression that they have created a viable, cutting-edge technology.

SEC enforcement division’s cyber unit chief, Robert Cohen, warned investors to exercise caution on investing in digital assets. This is particularly in respect of claims that appear to be too good to be true. For its part, the New York Southern District’s attorney office has sought criminal proceedings against the third co-founder.

Evidence Of Fraud

The regulator pointed out that it has got evidence of the fraudulent intent of the founders. The SEC cited text messages shared between co-founders of Centra as naked evidence to support its theory. Aside from that, the regulators made public a text correspondence sent by Sharma to Farkas and Trapani on a cease-and-desist letter received from a bank. This bank’s letter demanded Centra remove every reference to the institution.

The regulator thinks that Trapani had requested Sharma to ‘cook up’ a fraudulent document when it sought listing of CTR tokens. This was termed as a misleading one. Sharma advised Trapani not to text him and delete the texts that he has sent.

About the author

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Prateek Kulhari

Prateek is a business editor who writes about various topics such as technology, health and finance. At Pressly, he works along with the colourful folks that build a nation through tech startups. He is also a professional football player and video games enthusiast.