Crypto Firm Co-Founder to Plead Guilty in Celeb-Touted Scam

The third co-founder of a cryptocurrency firm plans to plead guilty to duping investors into putting more than $25 million in an initial coin offering that the company promoted with the help of celebrities including boxer Floyd Mayweather and musician DJ Khaled.

Sohrab “Sam” Sharma, co-founder of Centra Tech Inc., has agreed to change his plea, his lawyers told U.S. District Judge Lorna G. Schofield in a court filing Monday in New York. Sharma had been scheduled to go to trial in November.

Centra Tech’s other co-founders, Robert Farkas and Raymond Trapani, already pleaded guilty to charges that they misled investors by claiming to have developed a debit card, called the “Centra Card,” allowing users to make purchases with digital currency at any business accepting Visa or Mastercard. Farkas is scheduled for sentencing in October.

The trio founded Centra Tech after working at a luxury-car rental company in Florida called Miami Exotics, and they quickly found investors thanks to social media mentions by celebrities including Mayweather and DJ Khaled, who later agreed to settle charges by the Securities and Exchange Commission that they failed to disclose they had been paid for promoting the firm.

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 that 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.

©2020 Bloomberg L.P.

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