Two Co-Founders Of Cryptocurrency Company Charged (Scheme To Defraud Investors)

[nitpicker]

https://www.justice.gov/usao-sdny/pr/two-co-founders-cryptocurrency-company-charged-manhattan-federal-court-scheme-defraud

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Tuesday, April 3, 2018

Two Co-Founders Of Cryptocurrency Company Charged In Manhattan Federal Court With Scheme To Defraud Investors

Robert Khuzami, the Deputy United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrests of, and unsealing of a criminal complaint charging, SOHRAB SHARMA, a/k/a “Sam Sharma,” and ROBERT FARKAS, a/k/a “Bob,” two co-founders of a startup company called Centra Tech, Inc. (“Centra Tech”), with conspiring to commit, and the commission of, securities and wire fraud in connection with a scheme to induce victims to invest more than $25 million in investments through material misrepresentations and omissions. SHARMA and FARKAS were arrested Sunday evening in the Southern District of Florida and were presented yesterday in that District.
(snip)

From July 2017 through March 2018, SHARMA and FARKAS, two co-founders of Centra Tech, began soliciting investors to purchase Centra Tech tokens, a bespoke cryptocurrency that functions as an unregistered security in Centra Tech, through a so-called “initial coin offering” or “ICO.” As part of this effort, SHARMA and FARKAS, in oral and written offering materials that were disseminated via the internet, represented that Centra Tech had developed a debit card, the “Centra Card,” that allowed users to load the Centra Card with the cryptocurrency of their choice and then use the Centra Card to make purchases at any establishment that accepts Visa or Mastercard. As part of their sales pitch, SHARMA and FARKAS represented that Centra Tech had formed a partnership with Bancorp to have Bancorp issue Centra Cards licensed by Visa or Mastercard, and that Centra Tech held the requisite financial servicing licenses in 38 states, among other claims. Based in part on these claims, victims provided more than $25 million in investments for the purchase of Centra Tech tokens.

The claims that SHARMA and FARKAS made to help secure these investments, however, were false. In fact, Centra Tech had no relationships with Bancorp, Visa, or Mastercard, and at least seven of those 38 states have no record of any such licenses being issued to Centra Tech.

In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against SHARMA and FARKAS.
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[nitpicker]

1. Link to the SEC PR

https://www.sec.gov/news/press-release/2018-53