The system of Token Sales running for a while now might soon come to an end because scammers have misused this service. The US Securities and Exchanges Commission (SEC) has been working towards secure systems even more actively after concerns with Centra Tech’s fraudulent activities came up.
The SEC charged the startup Centra Tech for fraudulent practices during their ICOs. Projects such as SAFT are gaining much attention in such processes as it provides a framework for token sales.
Centra Tech betrays its investors
In December 2017, a lawsuit was filed against Centra Tech, a company which was endorsed by Floyd Mayweather Jr. and American record producer DJ Khaled, at the District Court in Florida. It happened because some investors detected fraud and demanded a refund.
Two of the members, Sohrab Sharma and Robert Farkas, were arrested for the matter. Both Sohrab and Robert were the operators of the coin offerings. The lawsuit even stated they cheated their investors to an amount of $32 million through their business Centra Tech.
The company also got into trouble for creating fictional characters and profiles in order to make their team stand out. They have made-up stories about the strong partnership with financial companies such as Visa, MasterCard, and Bancorp.
The SEC discovered this and announced that all of these partnerships are fake and never existed. Apart from having fake data, they were also brought to task for trading unregistered securities. However, Centra Tech denied the allegations in a blog post.
With regards to the lawsuit against Centra Tech, the founders Sharma and Farkas have been asked to give back all the money that they had taken from their investors. They are also banned from serving as officers of any public company and from being a part of any securities offering. Robert Farkas tried to flee from the country when these allegations were made but was stopped while trying to board the flight.
Despite all the claims, it looks like the endorsers, Boxer Mayweather and artist DJ Khaled, are safe and have not been charged for any of the shady activities. Earlier, Floyd Mayweather Jr. had put up posts on Instagram and Twitter in support of the ICO.
However, he took them down when the case was brought to light. Interestingly, even though on the Telegram channel the issues have been raised, the users refuse to agree to these allegations.
These activities seem to be non-negotiable and made it clear that there has to be a serious checks in place. With such a disgraceful charge on Centra Tech, the CTR token might be delisted from Binance. The company has denounced CT (Centra Tech) and even warned its users about this growing issue.
Binance stated they will be monitoring the case in detail. They have given the team an option to delist the coin from their platform. Consequently, as the SEC brought out the case, there has been a dip of 70% in the CTR price.