Mayweather’s promoted ICO Centra: Celebrity ICO scammers on the ropes
Sohrab Sharma and Robert Farkas have already been charged with fraud for selling “unregistered securities” regarding the $32 million they raised from the ICO of their CTR coin, but now lawmakers are warning that celebrity endorsers could also be in line for litigation.
While their posts have since been deleted, both the stars are alleged to have promoted CTR coin via their social media platforms, which have a huge following and subsequent influence. The SEC has warned that celebrities who get behind alleged scams like CTR risk being found guilty have aiding and abetting. The regulator added that promoters like Mayweather and Khaled would have to disclose the compensation they receive for putting out social media posts that back an ICO or digital token.
“They are clearly sending a signal,” Nick Morgan, a former SEC attorney and partner at US law firm Paul Hastings, explained to the Financial Times (paywall), adding that the SEC had “left the door open” to any other celebs that may have backed fraudulent activity. “There was nothing in there that I think anyone should take comfort from, just because they were not individually named,” he said.
Following reports that Sharma and Farkas were to face charges, Stephanie Avakian, codirector of the SEC’s Division of Enforcement, said in a statement (via Business Insider), “We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses.” Adding: “As the complaint alleges, these and other claims were simply false.”
Centra Tech, for their part, denied any wrongdoing in a blog post. “This lawsuit, which for the most part, appears to repeat unfounded claims regarding Centra Tech, alleges that Centra Tech’s initial coin offering of Centra Tokens was an unregistered sale of securities. The plaintiff’s complaint attempts to mimic claims and allegations the Securities and Exchange Commission has lodged against other cryptocurrency offerors,” it said, adding “Centra Tech disputes the allegations in the complaint.”