Centra Tech Co-founder sentenced for fraudulent ICO scheme

Centra Tech Co-founder sentenced for fraudulent ICO scheme

By Alice Leetham - min read
Image of fingers at keyboard writing code

Sam Sharma, 29, was given 8 years in prison for defrauding investors of $25 million

Yesterday, the US Department of Justice (DOJ) announced that Sohrab Sharma, aka Sam Sharma, had been sentenced for his role in Centra Tech’s fraudulent ICO. The Miami-based company claimed to offer financial products relating to cryptocurrencies and persuaded investors to hand over millions of dollars in digital funds.

Sharma and co-defendants Raymond Trapani and Robert Farkas founded the company in 2017, purporting to offer crypto products including the Centra card: a debit card that would supposedly be accepted at most establishments through partnerships with Visa and Mastercard. However, it transpired that no such partnerships existed.

The Centra card received publicity that year with both Floyd Mayweather and DJ Khaled being paid to promote it on social media. The pair were dismissed from a lawsuit brought against them, but were fined six figures in a 2019 settlement for failing to disclose the compensation they received for their endorsements.

Centra Tech also fabricated a CEO called “Michael Edwards” with 20 years’ experience in the banking industry. He was one of two fictional members of the company’s executive team. In addition to this, Centra Tech claimed to have licences in 38 states, despite licences not having been granted in a number of them.

US Attorney Ilan T Graff said, “Sohrab Sharma led a scheme to deceive investors by falsely claiming that the start-up he co-founded had developed fully functioning, cutting-edge cryptocurrency-related financial products. In reality, Sharma’s most notable inventions were the fake executives, fake business partnerships, and fake licenses that he and his co-conspirators touted to trick victims into handing over tens of millions of dollars. We will continue to aggressively pursue digital securities frauds like this one.”

Through these and other fraudulent claims, the defendants persuaded investors to part with a total of over $25 million. In fact, these funds, at certain points in 2018, were worth more than $60 million. The FBI seized 100,000 ETH from Centra Tech in 2018, which were sold for around $33.4 million this year. The DOJ intends to use these funds to compensate the victims of Centra Tech.

Co-founder Farkas was sentenced to a year in prison in December for his part in the scheme. Yesterday, Sharma was sentenced to eight years in prison for his leading role, as well as a $20,000 fine and an order to forfeit $36,088,960.