A 27-year-old Indian-American was arrested along with two others for allegedly defrauding investors in a US$60 million cryptocurrency fraud in the United States.
Sohrab Sharma and his partners, Raymond Trapani and Robert Farkas, who co-founded a startup Centra Tech have been charged with conspiring to commit securities and wire fraud. They are accused of running a scheme to induce victims to invest more than US$25 million in the digital currency issued by their company.
A grand jury in a New York Court indicted the trio earlier this month after their arrest by the Federal Bureau of Investigation.
The Deputy US Attorney Robert Khuzami said they were arrested following complaints against them pertaining to the same crime.
“As alleged, Sohrab Sharma and Robert Farkas took advantage of widespread investor interest in the rapidly growing cryptocurrency market to raise millions of dollars in investments in a startup company based on a false sales pitch,” Mr Khuzami said.
According to the court documents, Mr Sharma and the other co-founders of Centra Tech made representations that they had developed a debit card, the “Centra Card,” that could be loaded with the cryptocurrency and be used to make purchases. They also allegedly claimed to have formed a partnership with Bancorp to have Bancorp issued Centra Cards licensed by Visa or Mastercard and that their company had a financial servicing license in 38 states in the US.
The prosecutors alleged the claims were false and were a part of a sales pitch by the accused to lure investors.
"As alleged, the defendants conspired to capitalise on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO," Mr Khuzami added.
By October last year, the company managed to raise US$25 million by offering its digital currency. Due to appreciation in the value of those digital funds raised from victims, those digital funds are presently worth more than US$ 60 million.
Following their arrests, the Federal Bureau of Investigation seized 91,000 Ether units, consisting of digital funds raised from victims as part of the charged scheme. This seized digital currency is presently worth more than US$ 60 million.
All three accused are charged in a four-count indictment that in all carry 65 years in prison.
In a separate action, the Securities and Exchange Commission filed civil charges against Mr Sharma and Mr Farkas.
