The founder of a cryptocurrency firm Robert Farkas and two other founders Sohrab Sharma and Raymond Trapani of Centra Tech Inc. have admitted to scheming to dupe investors into committing over $25 million to the enterprise by deceiving them into an initial coin offering.
The trio was charged in 2018 for misleading investors by claiming to have developed a debit card allowing users to make purchases with digital currency at any business accepting Visa or Mastercard. Sharma and Trapani are scheduled to go to trial in November.
According to Bloomberg, Farkas on Tuesday pleaded guilty in federal court in Manhattan to conspiracy to commit securities fraud and wire fraud, appearing by phone before U.S. Magistrate Judge James Cott. He faced as much as a decade in prison under the charges, but under a plea agreement, prosecutors agreed to seek a sentence of 70 to 87 months and a fine of as much as $250,000.
The three founders established Centra Tech after working for Miami Exotics, a luxury car rental company in Florida. They were able to amass funds quickly taking advantage of social media mentions by celebrities including boxing promoter Floyd Mayweather and music producer DJ Khaled.
They also lied about having a Harvard-educated chief executive officer and other aspects of their business and failed to register the coin offering, the U.S. alleged.
The case is U.S. v. Sharma, 18-cr-340, U.S. District Court, Southern District of New York (Manhattan).
