Technologist - The FindLaw Legal Technology Blog

Cryptocurrency Founders Charged With Fraud

Just when cryptocurrency was looking like a tech sector savior ...

Tech stocks have been taking on water recently, and plummeting Bitcoin shares have helped drag them down. Not to mention attacks from the President on Amazon and hackers on Facebook ...

It's almost like a conspiracy, like someone is after cryptocurrency. Oh wait, that would be the Securities and Exchange Commission.

Centra Tech

In the continuing tale of suspected cryptocrooks, authorities have arrested the founders of Centra Tech.

The company, once endorsed by Floyd Mayweather and DJ Khaled, raised $32 million with its initial coin offering last year. Sohrab "Bob" Sharma and Robert Farkas claimed they had debit card services that users could use to "instantly convert hard-to-spend cryptocurrencies."

Not, the SEC said. A spokeswoman said Centra spun a "web of lies" about "supposed partnerships with legitimate businesses."

"As the complaint alleges, these and other claims were simply false," said Stephanie Avakian.

'Unregistered ICO'

Earlier this year, the SEC shut down AriseBank in an alleged $600 million cryptoscam. The scams, with lawsuits following, are becoming a symptom of "Bitcoin frenzy."

Otherwise legitimate businesses have been caught up in the get-rich hysteria. Investors in Overstock, for example, have sued to recoup allegedly related losses.

In the Centra case, the SEC has sharpened its focus on the "unregistered ICO." That would be SEC-speak for unregistered securities.

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