Centra Tech made $32 million from its ICO last year.
The US Securities and Exchange Commission has halted the business operations of Centra Tech according to an official press release in which it refers to the company as a “fraudulent scheme”.
The complaint is aimed at the two co-founders of the company, Sohrab “Sam” Sharma and Robert Farkas, who have both been arrested. Farkas had apparently bought plane tickets but was apprehended before he could leave the country.
The ICO raised more then 32 million dollars in September of last year, helped in no small part by endorsements from retired boxer Floyd “Money” Mayweather and recording artist DJ Khaled.
The SEC alleges that while the company claimed to be developing a cryptocurrency debit card in partnership with Visa and Mastercard, no such relationships existed in reality.
Sharma and Farkas are also accused of displaying “fictional executives with impressive biographies” on the company website and paying celebrities to advertise the ICO on social media.
Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, said: “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. As the complaint alleges, these and other claims were simply false.”