Teecht. Founders Of Cryptocurrency Companionship Indicted Inwards Manhattan Federal Courtroom Amongst System To Defraud Investors

Government Recovers Digital Funds Worth More Than $60 Million

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred yesteryear 28 U.S.C. § 515, announced that a grand jury inwards the Southern District of New York has returned an Indictment charging SOHRAB SHARMA, a/k/a “Sam Sharma,” RAYMOND TRAPANI, a/k/a “Ray,” together with ROBERT FARKAS, a/k/a “RJ,” a/k/a “Bob,” the 3 co-founders of a startup fellowship called Centra Tech, Inc. (“Centra Tech”), that purported to offering cryptocurrency-related fiscal products, with conspiring to commit, together with the committee of, securities together with wire fraud inwards connectedness with a system to stimulate victims to invest millions of dollars’ worth of digital funds for the buy of unregistered securities, inwards the shape of digital currency tokens issued yesteryear Centra Tech, through stuff misrepresentations together with omissions.  SHARMA, TRAPANI, together with FARKAS were all arrested terminal calendar month based on criminal complaints filed yesteryear this Office charging them with the same crimes.

Following their arrests, this Office together with the Federal Bureau of Investigation (“FBI”) seized 91,000 Ether units, consisting of digital funds raised from victims every bit role of the charged scheme.  This seized digital currency is shortly worth to a greater extent than than $60 million.  The representative has been assigned to US District Judge Lorna G. Schofield.

Mr. Khuzami said:  “As alleged, the defendants conspired to capitalize on investor involvement inwards the burgeoning cryptocurrency market.  They allegedly made simulated claims nearly their production together with nearly relationships they had with credible fiscal institutions, fifty-fifty creating a fictitious Centra Tech CEO.  Whether traditional or cutting-edge, investment vehicles can’t legally live on peddled with falsehoods together with lies.”

According to the allegations inwards the Indictment filed inwards this case, the criminal complaints previously unsealed inwards this case, together with inwards other filings together with statements at world courtroom proceedings inwards the case:[1]

After SHARMA together with TRAPANI worked together at a luxury automobile rental fellowship inwards Florida called “Miami Exotics,” they together with FARKAS co-founded a startup fellowship called Centra Tech that claimed to offering cryptocurrency-related fiscal productions, including a purported debit card, the “Centra Card,” that supposedly allowed users to pass diverse types of cryptocurrency to construct purchases at whatever establishment that accepts Visa or Mastercard payment cards.  In some July 2017, SHARMA, TRAPANI, together with FARKAS began soliciting investors to buy unregistered securities, inwards the shape of digital tokens issued yesteryear Centra Tech, through a so-called “initial money offering” or “ICO.”  As role of this effort, SHARMA, TRAPANI, together with FARKAS, inwards oral together with written offering materials that were disseminated via the internet, represented: (a) that Centra Tech had an experienced executive squad with impressive credentials, including a purported CEO named “Michael Edwards” with to a greater extent than than twenty years of banking manufacture sense together with a master’s grade inwards employment concern direction from Harvard University; (b) that Centra Tech had formed partnerships with Bancorp, Visa, together with Mastercard to number Centra Cards licensed yesteryear Visa or Mastercard; together with (c) that Centra Tech had money transmitter together with other licenses inwards 38 states, alongside other claims.  Based inwards role on these claims, victims provided millions of dollars’ worth of digital funds inwards investments for the buy of Centra Tech tokens.  In or nearly Oct 2017, at the destination of Centra Tech’s ICO, those digital funds raised from victims were worth to a greater extent than than $25 million.  Due to appreciation inwards the value of those digital funds raised from victims, those digital funds are shortly worth to a greater extent than than $60 million.   

The representations that SHARMA, TRAPANI, together with FARKAS made to assist secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” together with some other supposed fellow member of Centra Tech’s executive squad are fictitious people who were fabricated to dupe investors; Centra Tech had no such partnerships with Bancorp, Visa, or Mastercard; together with Centra Tech did non receive got such licenses inwards a number of those states.

SHARMA, TRAPANI, together with FARKAS were good aware of the falsity of such claims.  For example, with honor to Centra Tech’s purported partnerships with Bancorp, Visa, together with Mastercard, SHARMA engaged inwards a cellular telephone text message conversation with TRAPANI on or nearly July 31, 2017, inwards which they discussed Centra Tech’s lack of actual partnerships with banks or credit menu companies.  During that exchange, SHARMA wrote:  “Should write downwardly a listing of places to telephone telephone tomorrow,” “For the conbranded [sic] card.”  Later inwards the exchange, SHARMA wrote:  “Gotta larn it going on the banks today plz.”  SHARMA likewise later wrote:  “We exactly demand to larn s [sic] banking license,” “Need our straight understanding with visa,” “Or MasterCard,” “That’s the move,” “Cut out the middle man,” “I want nosotros exactly knew someone.”

With honor to Centra Tech’s purported CEO “Michael Edwards,” SHARMA text-messaged TRAPANI on or nearly July 29, 2017, that they “Need to observe soul who looks similar Michael,” “Team photos,” “He’s existent lol,” “Everyone real,” “Except Jessica,” “And Mike.”  Similarly, SHARMA later wrote during that same exchange:  “Gonna kill both Ceo together with her,” “Gonna order they were married together with got into an accident.”

Finally, with honor to Centra Tech’s purported money transmitter together with other licenses inwards 38 states, SHARMA had a text message conversation with TRAPANI together with FARKAS on or nearly August 30, 2017, nearly applying for dry reason licenses that Centra Tech had previously represented it already held inwards 38 states.  For example, SHARMA wrote inwards i message on or nearly August 30, 2017, to TRAPANI together with FARKAS:  “Gotta apply for all licenses,” “Should I fifty-fifty order this.”

On or nearly May 2, 2018, this Office together with the FBI seized, pursuant to a judicially authorized seizure warrant, 91,000 Ether units, consisting of digital funds raised from victims who purchased digital tokens issued yesteryear Centra Tech during its ICO based on fraudulent misrepresentations together with omissions.  The seized funds are shortly worth to a greater extent than than $60 million.

In a split upwardly action, the US Securities together with Exchange Commission (the “SEC”) has filed civil charges against SHARMA, TRAPANI, together with FARKAS.          

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SHARMA, 27, TRAPANI, 27, together with FARKAS, 31, are all residents of Florida.  All 3 of them are charged inwards a four-count Indictment with i count of conspiracy to commit securities fraud, which carries a maximum potential judgement of 5 years inwards prison; i count of conspiracy to commit wire fraud, which carries a maximum potential judgement of twenty years inwards prison; i count of securities fraud, which carries a maximum potential judgement of twenty years inwards prison; together with i count of wire fraud, which carries a maximum potential judgement of twenty years inwards prison.  In add-on to potential prison theatre sentences, each of these charges likewise carries potential fiscal penalties.  The maximum potential prison theatre sentences inwards this representative are prescribed yesteryear Congress together with are provided hither for informational purposes only, every bit whatever sentencing of the defendants volition live on determined yesteryear the judge.

Mr. Khuzami praised the operate of the FBI together with thanked the SEC for its assistance.  Mr. Khuzami likewise thanked the Department of Homeland Security, Homeland Security Investigations (“DHS-HIS”) together with the District Attorney’s Office for New York County for their assistance inwards this case.

This representative is beingness handled yesteryear the Office’s Securities together with Commodities Fraud Task Force.  Assistant US Attorneys Samson Enzer together with Negar Tekeei are inwards accuse of the prosecution.  Assistant US Attorney Daniel Tracer is inwards accuse of the forfeiture aspects of the case.

The allegations contained inwards the charging documents inwards this representative are only accusations, together with the defendants are presumed innocent unless together with until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Complaints together with the Indictment, together with the description of the Complaints together with the Indictment laid forth herein, constitute exclusively allegations, together with every fact described should live on treated every bit an allegation.