The Department of Justice in the Southern District of New York sentenced Sohrab Sharma, one of the co-founders of the infamous crypto project “Centra Tech,” to eight years in prison yesterday. The project raised over $25 million in an initial coin offering (ICO) in 2017 before it was flagged as a fraud.
Centra touted itself as a niche firm that specialized in crypto finance products such as debit cards. It advertised a false partnership with international card processors Visa and Mastercard to gain popularity and hired boxer Floyd Mayweather and music producer DJ Khaled to promote the project and gain legitimacy with coin buyers.
But in 2018, the US Securities and Exchange Commission (SEC) found that none of those claims were true and that Sharma and his partners—Robert Farkas and Raymond Trapani—were running an elaborate scam. A court case followed over the years, with Farkas getting sentenced to prison last year and forfeiting ill-gotten gains of $347,000.
Mayweather and music producer DJ Khaled, meanwhile, became the first individuals to be charged by the US authorities in 2018 for promoting the unlawful coin offering and paid $300,000 and $100,000 as fines respectively at the time.
Yesterday saw the case come to a close with Sharma, Centra's mastermind, being sentenced. He had earlier pled guilty to conspiring to commit securities fraud, wire fraud, and mail fraud by soliciting public funds for the launch of Centra coins.
“Sharma led a scheme to deceive investors by falsely claiming that the start-up he co-founded had developed fully functioning, cutting-edge cryptocurrency-related financial products,” said Ilan Graff, the Attorney for the United States.
Graff added that Sharma’s only ‘inventions’ were the creation of fake executives, fake partnerships, and fake business plans to create hype around Centra and misguide gullible investors.
Apart from the prison time, Sharma was sentenced to three years of supervised release and ordered to pay a fine of $20,000. He was further ordered to forfeit over $36 million in illegal gains from the Centra coin sale.
Meanwhile, US authorities said they sold the seized from the Centra coin sale to the tune of $33 million earlier this year. The amount would be used to compensate victims of the fraud, the court added.