Sohrab Sharma, co-founder of now-defunct cryptocurrency company Centra Tech in Florida, was sentenced to eight years in prison after pleading guilty to defrauding investors over a fraudulent coin offering (ICO). In addition, the court ordered Sharma to forfeit $ 36,088,960.
Material misrepresentation
Prior to Sharma’s conviction, the US Department of Justice (DOJ) also announced the arrest of Robert Joseph Farkas, another Centra Tech thought leader. Both Sharma and Farkas are accused of using fabricated business relationships with legitimate institutions to defraud investors.
In a statement, United States attorney Ilan T. Graff said Sharma “ran a program to deceive investors by falsely claiming that the startup he co-founded had developed fully functional, cutting-edge funding related to cryptocurrency products . “
“In reality, Sharma’s most notable inventions were the fake executives, fake business partnerships, and fake licenses that he and his co-conspirators denounced in order to induce the victims to turn over tens of millions of dollars. We will continue to aggressively pursue digital security fraud such as this, ”noted Graff.
In a document filed in the Southern New York District Court in 2018, investigators accused Sharma of “material misrepresentations” about Centra Tech and its alleged partnerships with Bancorp, Visa and Mastercard.
Compensation for Centra Tech Victims
In addition to fake profiles and “claims that Centra Tech had cash transmitters and other licenses in 38 states,” the masterminds also used celebrities like DJ Khaled and Floyd Mayweather to promote the scam. As reported by news.Bitcoin.com, Mayweather and Khaled were later fined for their roles in promoting the fraud.
After the ICO ended, Centra Tech held more than $ 25 million worth of digital assets. According to Graff, in 2018 the FBI would seize the digital assets, which at the time were equivalent to 100,000 ETH. Later, “the United States Marshals Service sold the seized ether units earlier this year for approximately $ 33.4 million.”
Regarding the seized funds, the DOJ said, “These funds and other forfeited fraud proceeds will be available for possible use in a removals program that the Justice Department plans to set up to compensate victims of Centra Tech fraud.”
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