Centra Tech Co-Founder Handed Prison Term for $25M Crypto Fraud

The cryptocurrency firm had falsely claimed to have an impressive executive team, as well as 38 state money transmitter licenses.

Dec 16, 2020 at 10:41 a.m. UTC

Updated Sep 14, 2021 at 10:43 a.m. UTC

shutterstock_761394472 — U.S. District Court for the Southern District of New York

Robert Farkas, a co-founder of the cryptocurrency firm Centra Tech, has been sentenced to one year and one day in prison for conducting an illegal initial coin offering (ICO) that fleeced investors for $25 million.

The Miami-based company had purported to offer crypto-based financial products such as a debit card, according to a news release from the U.S. Attorney for the Southern District of New York on Tuesday.
It had touted an impressive executive team that did not exist, as well as falsely claiming it held 38 state money transmitter licenses, prosecutors said.
In July 2017, Farkas and his partners, Raymond Trapani and Sohrab Sharma, held an ICO, or token sale, raising the $25 million from investors who had believed Centra Tech's claims.
Farkas had previously pleaded guilty to conspiring to commit securities fraud and wire fraud in connection with the use of material misrepresentations and omissions to solicit investors to purchase securities in the form of the firm's tokens.
“Farkas and his co-conspirators created fictitious executives and fabricated business relationships with legitimate institutions to dupe investors into handing over millions of dollars for a fraudulent ICO,” said lan T. Graff, chief counsel to the acting U.S. attorney, in a statement.
Farkas will also face three years of supervised release and must forfeit $347,062 and a Rolex watch purchased with the proceeds of the scam.
The United States Marshals Service sold ether cryptocurrency seized from Centra Tech for approximately $33.4 million earlier this year.

Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.