SEC Adds Charges Associated with Centra Initial Coin Offering Fraud, Says Raymond Trapani was “Mastermind” Behind the Scam

The Securities and Exchange Commission (SEC) has released additional fraud charges affiliated with the Centra Tech $32 million initial coin offering (ICO) that raised money in 2017. Ealier this month, the SEC filed a complaint against Centra Tech, Sohrab “Sam” Sharma and Robert Farkas regarding the issuance of CTR tokens. Today, the SEC has rolled in another Centra founder – Raymond Trapani – alleging that Trapani was the “mastermind” of the multi-million scheme to fleece investors.

Trapani, age 26, resides in Florida, held various titles at the company including Chief Operating Officer and “Strategic Manager.” He was arrested by the FBI on April 20, 2018.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Trapani

“We allege that the Centra co-founders went to great lengths to create the false impression that they had developed a viable, cutting-edge technology,” said Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.  “Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.”

The SEC says that Trapani marketed a bogus offering that promoted “nonexistent business relationships with major credit card companies, fictional executive bios, and misrepresentations about the viability of the company’s core financial services products.”  Trapani and Sharma apparently manipulated trading in the CTR Tokens to generate interest in the company and prop up the price of the tokens.

The SEC quotes texts between the defendants citing one example after receiving a cease-and-desist letter from a major bank directing him to remove any reference to the bank from Centra’s marketing materials, Sharma texted to Farkas and Trapani:

“[w]e gotta get that s[***] removed everywhere and blame freelancers lol.”  And, while trying to get the CTR Tokens listed on an exchange using phony credentials, Trapani texted Sharma to “cook me up” a false document, prompting Sharma to reply, “Don’t text me that s[***] lol.  Delete.

The SEC complaint is interesting because it outlines the extent of social driven hype utilized to pump the bogus ICO. One Centra critic was said to have been bribed with CTR tokens worth $2000.

“Yea 2k CTR [Tokens].” Sharma explained the nature of this bribe: “To him it’s 2 racks. To us its air Lol.”

Centra also benefited from the high profile promotion by Floyd “Crypto” Mayweather who marketed the ICO to his millions of Twitter followers.

The SEC’s amended complaint, filed in federal court in Manhattan, charges Trapani with violating the anti-fraud and registration provisions of the federal securities laws.

 


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