Sohrab “Sam” Sharma, the founder of defunct cryptocurrency firm Centra Tech was sentenced to 8-years in prison for duping investors out of $36 million. The firm had hired high-profile celebrities including Floyd Mayweather and DJ Khaled whom the firm paid for promotions to lure more investors. Sharma pled guilty to conspiring to commit securities fraud, wire fraud, and mail fraud as part of an initial coin offering.
Centra Tech was one of the many crypto companies to lure heavy investment during the 2017-18 ICO frenzy on the pretext of launching a cryptocurrency in the near future. Sharma along with two of his recruits managed to raise nearly $25 million through social media promotions and mentions from high-profile celebrities. Both Khaled and Mayweather later settled with the SEC for failing to disclose they have been paid to promote the project.
While prosecutors sought 14-15 years jail term for the founder, Sharma’s counsel pleaded for a two and a half year term claiming the defendant was not the evil behind the fraud.
“I am deeply sorry and devastated for what my actions have done to those who believed in me and my vision. I wanted to fake it till I made it, and I was hoping that the ends justified the means.”
As per the plea deal, Sharma forfeited 100,000 ETH raised from the sale of the digital token of his company.
Centra Tech Reflects Everything Wrong With ICO Era
The hype around cryptocurrencies in 2017 gave rise to Initial Coin Offering (ICOs) and an easy way of raising funds to develop and launch new crypto tokens. In what many called a revolution in fundraising soon turned into a playground for fraudsters and scams. It was estimated more than 90% of the projects were either scams or never made it to any exchange for one reason or the other.
Centra Tech was no different, where the project was misleading investors on nearly every aspect right from claiming that it is being headed by a Harvard-educated chief executive officer with decades of business experience. Sharma also lied about having operational licenses in more than three dozens states and partnerships with payment processing giants such as Visa and Mastercard.