The US Department of Justice in a press release announced the arrest of Raymond Trapani, the third co-founder of the crypto startup Centra Tech. Thus, all three founders of the project, during which $32 million were collected during the ICO, have been charged with conducting a fraudulent token sale.
The project organizers attracted investors to create Centra Card, a debit card for converting cryptocurrency into fiat money, which, according to ICO organizers, was actively supported by well-known international financial companies Visa and Mastercard.
As found by the US Securities and Exchange Commission (SEC), in reality, international payment systems were not involved in the development of the claimed product and no partnerships or business arrangements existed between Centra and the companies.
In essence, Centra advertised a non-existent product based on non-existent business relationships with credit card issuers. In addition, the company published fictitious biographies of officials, and photographs of team members on the project website belonged to completely different people. In addition, Centra Tech used famous personalities: musician DJ Khaledk and boxer Floyd Mayweather in advertising and promoting a false product. The SEC warned Centra Tech last year that it is illegal to use celebrities to advertise an ICO to attract attention if the reward received is not public.
The indictment alleges that Raymond Trapani and Sorabh Sharma deliberately inflated the price of the CTR token, creating the false impression that they had developed innovative technology. The SEC clarifies that the very conduct of ICOs and financial investments in virtual currencies is absolutely legal, which cannot be said with regard to the dissemination of deliberately false information that misleads investors - this is already fraud.
Now the prosecution demands from the founders of Centra to recover the millions collected during the blockchain project, “obtained through the illegal sale of unregistered securities” and to impose fines on them for disseminating false information. In addition, all defendants are prohibited from holding management positions and participating in the distribution of securities.
The company’s Telegram channel urges not to panic and wait for an “official” statement from the founders of Centra Tech. Channel administrators block links to SEC messages.. However, the news that by the end of last month the company's bank accounts were empty and all Centra Tech employees were fired is spreading very quickly.
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