The SEC has announced the arrest of the two founders of the Centra Tech ICO, alleging that Sohrab “Sam” Sharma and Robert Farkas had “masterminded a fraudulent ICO” which raised $32 million last year.
Shama and Farkas are now both believed to be in police custody, with Farkas having apparently been apprehended before he could flee the country.
Sophisticated Marketing Campaign
The ICO had promised VISA and Mastercard-backed crypto debit cards yet, according to the SEC, Centra “had no relationships with Visa or MasterCard.” The SEC also alleges that the ICO’s website contained fake team members “with impressive biographies” and that market materials were “false or misleading”.
Stephanie Avakian of the SEC summed up the company’s approach as “a sophisticated marketing campaign to spin a web of lies which relied heavily on celebrity endorsements.”
The SEC’s intervention does not come as a complete surprise. Last December a class action lawsuit was brought against Centra Tech by a collection of investors who alleged that they had been unwitting participants in a sale of unregulated securities.
Trading the CTR token has become more difficult this morning. Binance announced that it was monitoring the situation and considering delisting, while KuCoin said that CTR had been designated as “a high-risk project” and that deposits were now closed. They also promised further monitoring and “appropriate actions”, which could include delisting.
So far the Centra team has not commented on the development. Its Twitter feed was updated yesterday with news of their booth at the Deconomy2018 conference, but as yet there is no mention of the arrest of its founders.
Given the bad news, it is perhaps surprising how many CTR investors appear convinced that this is nothing more than a good buying opportunity. The ICO’s Telegram channel has several messages along the lines of this one by ‘Falcone District’: “ppl are laughing now and thinkign its stupid. but if everything goes smooth and fud fades, centra will 10x like nothing lol”.
‘Hassan’, another CTR investor, was also supportive. “When this turns out to be just fud,” he said, “all you lots will be kicking yourself.”