That's because professional boxer Floyd Mayweather and rapper DJ Khaled, the two faces of said cryptocurrency, never actually intended for their little tech scheme to blossom into actual returns for those who trusted their empty rhetoric on social media. It was all just a ploy to get fans to part with their cash, and now the U.S. Securities and Exchange Commission (SEC) is getting involved by pressing charges against this latest example of cryptocurrency fraud.
Reports explain that the SEC recently charged Sohrab "Sam" Sharma and Robert Farkas, co-founders of the company known as Centra Tech Inc., for violating certain anti-fraud and registration provisions contained within U.S. securities laws. The Feds say Sharm and Farkas masterminded the fraudulent initial coin offering, or ICO, that Mayweather and Khaled have been hawking, and further broke the law by selling these unregistered investments through a so-called "CTR Token."
Filed in New York, the charges add that the pair "claimed that funds raised in the ICO would help build a suite of financial products" like debit cards that users could use to instantly convert the obscure cryptocurrency into actual legal tender. This represents another false claim, the charges allege, because Centra Tech Inc. has never had a relationship with a single legitimate debit card company.
All Centra Tech Inc. did was sell investors on "the promise of new digital technologies by using a sophisticated marketing campaign," reads an SEC statement, referring to Mayweather and Khaled who actively pushed their social media followers to adopt the cryptocurrency.
"The defendants relied heavily on celebrity endorsements and social media to market their scheme," added Steve Peikin, co-director of the SEC's Division of Enforcement, in a recent statement about the fiasco. "Endorsements and glossy marketing materials are no substitute for the SEC's registration and disclosure requirements as well as diligence by investors."
Investment into ICOs grew by 3,700 percent between 2016 and 2017 – it's no wonder there are so many scams these days
It's a digital gold rush, of sorts, that's largely a product of the immense growth that's taken place over the past several years in ICOs. While only 46 ICOs existed in 2016, which collectively drew $96 million in investment, that number soared to 228 ICOs in 2017, which altogether garnered a whopping $3.6 billion in investment. This represents a growth rate of nearly 3,700 percent, a figure that's caught the attention of plenty of bad apples.
Bitcoin, as you've probably heard, was the first major cryptocurrency to hit the scene and see impressive success, having grown in value from just a few dollars per "coin" several years back to around $20,000 per coin back in December 2017. Many who watched this digital boom take place now want in on the action, and some of them are willing to stoop so low as to set up their own fake ICOs in order to scam gullible investors.
This is exactly what Centra Tech Inc. did with the help of Mayweather and Khaled, both of whom are likely to be let off the hook for their involvement simply because they were more figureheads than actual masterminds. But you can be sure that this crackdown by the SEC will have repercussions throughout the cryptocurrency industry, and will hopefully stifle similar efforts to scam investors with other fake ICOs.
See BitcoinCollapse.news for more coverage of the collapse of crypto fraud.
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