Centra Tech and Fraudulent ICO Scheme

The Securities and Exchange Commission publicizes additional fraud charges stemming from Centra Tech’s bogus $32 million fraudulent ICO scheme. This time, the SEC adds charges for another Centra Tech co-founder, Raymond Trapani. For context, Centra Tech is the company facing charges for the fraudulent issuance of “CTR Tokens” during its Initial Coin Offering. Earlier this month, Centra’s two other co-founders, Sohrab “Sam” Sharma and Robert Farkas, were also recipients of criminal charges for their roles in the fraud scheme.

“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,” - Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.

Trapani Dubbed Mastermind of Fraudulent ICO Scheme

The SEC alleges Trapani’s mastermind criminal skills are the driving force behind the scheme. Trapani's ability to hook investors was impressive, despite nonexistent business relationships, fake executive bios, and misrepresentations about company viability. Furthermore, Trapani and Sharma were key in creating investor hype by artificially inflating the CTR Token trading price.

Perhaps most disturbing, yet comical, are the text messages between co-defendants revealing their fraudulent intent.  For example, upon receiving a cease-and-desist order from a major bank directing Centra Tech 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.”

Double Tapped By Prosecutors 

To make matters worse, Trapani faces charges from the SEC and the U.S. Attorney’s Office for the Southern District of New York.  In effect, Trapani is in a lot of trouble for violating the anti-fraud and registration provisions of federal securities laws.