Robert Farkas, the co-founder of cryptocurrency firm Centra Tech, recently plead guilty to fraud. The fraud is related to a scheme that made several investors pour over $25 million dollars’ worth of crypto assets into Centra Tech.
A multi-million-dollar fraud
Robert Joseph Farkas aka RJ plead guilty to committing securities and wire fraud in connection which lured victims to invest over $25 million worth of digital currencies with Centra Tech, Inc.
The Centra Tech co-founder and his co-conspirators made material misrepresentations and omissions to solicit investors into purchasing securities, in the form of digital currencies. The digital currency was the token issued by the company during its initial coin offering (ICO) in July 2017. The Superseding Information and other court filings suggest that Farkas, Raymond Trapani, and Sohrab Sharma founded Centra Tech in 2017.
The firm claimed to work on crypto-based financial products, which included a debit card called “Centra Card” which could help users make purchases using digital currencies. The cards were supposed to be accepted anywhere where Visa or Mastercard cards were being accepted. Farkas and his partners solicited investments between July 30, 2017, and October 5, 2017. Between this time, they asked investors to buy Centra Token or CTR using their ICO.
Fake credentials and claims
Farkas and the team told investors that they had an executive team with impressive credentials and experience. They also said that their CEO Michael Edwards had 20 years of experience in the banking industry. He also had a master’s degree in business administration from Harvard. They said that Centra Tech already has partnerships with Visa, Mastercard, and Bancorp which will use Centra Cards licensed by Mastercard and Visa.
When the ICO ended in October 2017, the firm had more than $25 million, which at one point was worth $60 million. As all the claims made by Farkas and his co-defendants were fraud and their CEO Edwards were a fictional person and even their partnerships with Bancorp etc. were fake, they were charged with a securities fraud.