Crypto Firm Co-Founder Gets Year in Prison Over Debit Card Scam

(Bloomberg) -- A co-founder of a cryptocurrency firm was sentenced to a year in prison after pleading guilty to tricking investors out of more than $25 million in an investment scam promoted with the help of celebrities including Floyd Mayweather and musician DJ Khaled.

Robert Farkas, 34, who created the firm Centra Tech with two other former co-workers at a luxury car rental company, was sentenced on Tuesday by U.S. District Judge Lorna G. Schofield in Manhattan. Farkas’ two co-founders have also pleaded guilty to their role in the scheme.

Prosecutors said in 2018 the men solicited investors to commit funds to an initial coin offering for a digital currency they called “Centra tokens” or “CTR tokens” by falsely claiming to have developed a debit card that would allow users to make purchases with digital currency at any business accepting Visa or Mastercard.

They also said they had a Harvard-educated chief executive officer with more than 20 years of business experience, partnerships with large companies including MasterCard and Visa and licenses in more than 38 states. The men quickly found investors thanks to social media mentions by celebrities including Mayweather and Khaled, who later agreed to settle charges by the Securities and Exchange Commission that they failed to disclose they had been paid to promote the firm.

©2020 Bloomberg L.P.