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US Crypto Company Founders Indicted For Securities Fraud


A Federal court in Manhattan has indicted the founders of a cryptocurrency-related start up company for defrauding investors in the name of unregistered securities.

Florida residents Sohrab Sharma, 27, Raymond Trapani, 27, and Robert Farkas, 31, were arrested last month based on criminal complaints filed by the U.S. Attorney's Office in Southern District of New York.

They were charged with committing securities and wire fraud in connection with a scheme to induce victims to invest millions of dollars' worth of digital funds for the purchase of unregistered securities, in the form of digital currency tokens issued by Centra Tech, through material misrepresentations and omissions.

Following their arrests, FBI seized 91,000 Ether units raised from victims as part of the charged scheme in an ICO. The U.S. Department of Justice said the seized digital currency is worth more than $60 million.

Robert Khuzami, Attorney for the United States, said, "As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO. Whether traditional or cutting-edge, investment vehicles can't legally be peddled with falsehoods and lies."

The startup company called Centra Tech issued a debit card named "Centra Card," misleading card holders that they can spend various types of cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard payment cards.

In July 2017, Centra Tech began soliciting investors to purchase unregistered securities, in the form of digital tokens issued by the company, through an ICO.

They falsely represented that Centra Tech had an experienced executive team and "had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Card licensed by Visa or Mastercard." They also represented that the company "had money transmitter and other licenses in 38 states, among other claims.

Based on these claims, victims provided millions of dollars' worth of digital funds in investments for the purchase of Centra Tech tokens, DOJ says.

The Department of Justice found that statements made by the three to secure these investments were false.

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