False Claims and Misrepresentations
The U.S. SEC announced additional fraud charges against Raymond Trapani, the third co-founder of Centra Tech Inc., which raised US$32 million for a crypto-debit card last year through an ICO endorsed by DJ Khaled and boxer Floyd Mayweather (picture above presenting the non-existing crypto-debit card).
The company’s other two co-founders, Sam Sharma and Robert Farkas, were charged and arrested earlier this month.
“We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology,” “Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.” (Robert A. Cohen, SEC’s Cyber Unit Chief).
The SEC calls Trapani the “mastermind” behind the fraudulent ICO scheme, which lured investors with
- false claims of major credit card partnerships,
- misrepresentations about the company’s product,
- fake founder biographies and
- price manipulation of its Centra tokens (CTR).
Consequently, the SEC claims Trapani violated the anti-fraud and registration provisions of the federal securities laws. The complaint calls for permanent injunctions, the return of ill-gotten gains, plus interest and penalties. It also calls for barring Trapani from serving as a public company officer or director and from offering securities.
Criminal Charges and Arrest
In a related action, the U.S. Attorney’s Office for the Southern District of New York filed criminal securities and wire fraud charges against Trapani, who was arrested Friday morning. Trapani faces one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, one count of securities fraud and one count of wire fraud. The charges carry a maximum sentence of 20 years,