A lot of celebrities had chosen to lend credibility to Initial Coin Offerings (ICOs), but that trend seems to backfiring.
A case in point is Centra, an ICO that was endorsed by famous heavy-weight boxer Floyd Mayweather Jr. According to people familiar with that venture, it appears things are going from terrible to more regrettable especially as the Securities and Exchange Commission (SEC) in the US has accused the platform of falsely taking money from investors.
The SEC’s accusations are an extremely troublesome turn of events for the industry, but one that is not precisely astonishing.
In spite of the fact that the Centra’s ICO shows up at first as flawlessly real, it appears the SEC has discovered sufficient information to allow the regulator to proceed with charges for the company. The regulator alleges that the Centra group made a deceitful offering and in the process collected over $32 million from unsuspecting investors.
By offering unregistered securities, the group is in violation of existing SEC guidelines. Analysts who are close to the matter say such action will never again be tolerated by the SEC, for clear reasons.
What makes this case so fascinating is that Floyd Mayweather Jr. was a paid endorser who effectively advertised Centra’s ICO. For now, whether SEC regulators will go for the boxer remains unclear.
However, many beneficiaries of Centra Tech have being accused of violating existing securities laws. In effect, things are not looking good for anyone related with this venture.
The SEC is specifically looking into claims made by the group that it was offering a debit card supported by Visa and MasterCard that would enable clients to instantly change over difficult to-spend cryptocurrencies into U.S. dollars or other forms of fiat money.
In reality, the SEC investigation revealed that Centra had no links with Visa or MasterCard. The SEC likewise asserts that to advance the ICO, founders Sharma and Farkas listed fictional names as executives, posted false or deceiving marketing materials to Centra’s site, and paid famous people to tout the ICO via social media.
Clearly, Centra Tech would not have ever been as large as it got without the superstar support the undertaking got. While Floyd Mayweather Jr. has since erased Instagram posts he made in support of the ICO, there is unquestionable proof that he was associated with advancing its cause. With the SEC looking at such support, this may not be the last we hear about this story
The initial coin offering industry has been accused of numerous tricks and misrepresentation attempts. While this doesn’t mean Centra Tech had no genuine aims, the absence of any real agreements with card guarantors means Centra Tech was nothing but a fraud.