Centra Tech ICO Scam

It is a good idea to avoid any ICO endorsed by a celebrity. Centra Tech used paid endorsements from prominent celebrities such as boxer Floyd Mayweather and singer DJ Khaled.  These are two of the last people you should look to for ICO investment advice.

Centra Tech is a Delaware Corporation, headquartered in Miami Beach, Florida. Centra Tech offers blockchain products such as a Wallet to store digital assets, a Prepaid Card to spend the digital assets, and three soon to be released products and services, which include a Marketplace to buy goods with the digital assets, a cryptocurrency Exchange Platform to buy, sell and trade digital assets, and a open-source hyper speed DPoS Blockchain. – Source centra.tech

The U.S. Securities and Exchange Commission has halted the Centra Tech initial coin offering and charged its founders with orchestrating a fraudulent initial coin offering.

Here are the highlights of the Centra Tech ICO scam:

From approximately July 30, 2017 through October 5, 2017, Defendants raised at least $32 million from thousands of investors through the sale of unregistered securities issued by Centra Tech., Inc. (“Centra”), an entity controlled primarily by Defendants. The Centra securities were issued in a so-called “initial coin offering” (“ICO”), a term that is meant to describe the offer and sale of digital assets issued and distributed on a blockchain. Defendants sold the Centra Token (CTR) (“CTR Token” or “Centra Token”), an ERC20 token issued on the Ethereum blockchain, in Centra’s ICO. Defendants promoted the Centra ICO by touting nonexistent relationships between Centra and well-known financial institutions, including Visa, Mastercard and The Bancorp.

Defendants, individually and through Centra, engaged in an illegal unregistered securities offering and, in connection with the offering, engaged in fraudulent conduct and made material misstatements and omissions designed to deceive investors in connection with the offer and sale of securities in the Centra ICO.

The Centra ICO was an illegal offering of securities for which no registration statement was filed with the Commission or was then in effect, and as to which no exemption from registration was available. The Centra ICO was a generalized solicitation made using statements posted on the internet and distributed throughout the world, including in the United States, and the securities were offered and sold to the general public, including to United States investors, in this district and elsewhere.

Centra raised funds from investors — purportedly to create the “Centra Line” of products — a financial services system that would enable holders of various hard-to-spend “cryptocurrencies” to convert their assets easily into legal tender, such as U.S. dollars, and spend “cryptocurrencies” in real time with the “Centra Card.”

Specifically, Defendants claimed in promotional materials on Centra’s website, in various social media platforms, and in Centra offering materials, that Centra offered a physical “crypto debit card” that was connected to a virtual “smart wallet” via an Apple or Android smartphone application.

Defendants also claimed that — through Centra’s “partnerships” with Visa, Mastercard, and The Bancorp — the Centra wallet, debit card and application would allow users to exchange, withdraw, or spend “cryptocurrencies” anywhere that accepts Visa and Mastercard.

Defendants created, reviewed, and distributed marketing materials promoting Centra and the ICO, which claimed that the CEO and Co-Founder of Centra was an experienced businessman named “Michael Edwards,” and Sharma stated in a public interview that “Edwards” invested “a lot of capital originally” to help establish Centra.

Defendants also claimed directly and through Centra’s marketing materials that the “Centra Token Rewards Program” entitled investors to share in Centra’s future earnings. Specifically, Defendants claimed that token holders would be paid “rewards” of 0.8% of the total revenue that Centra earned from Centra Card transactions.

Contrary to Defendants’ false representations, and as Defendants knew or recklessly disregarded: (i) Centra did not have any “partnership” or other relationship with Visa, Mastercard, or The Bancorp; (ii) “Michael Edwards” and other Centra executives pictured in its promotional materials were fictional, and the photographs used to identify the fictional “executives” were photos taken from the internet or pictures of Defendants’ relatives; and (iii) investors who purchased Centra Tokens would not receive future payments or “revenue share” from agreements with Visa or Mastercard.

The foregoing false and misleading statements appeared variously on the Companies’ websites, including in a white paper (“White Paper”) issued and updated by Defendants in connection with the offer and sale of its securities during the Centra ICO, as well as in numerous other online fora such as social media, websites, and press releases.

– Source SEC

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