Centra Tech Scam: DJ Khaled and Boxer Floyd Mayweather Face Class Action Lawsuit
Music producer DJ Khaled and boxer Floyd Mayweather are facing a lawsuit due to their endorsement of the Centra Tech's initial coin offering (ICO) that allegedly defrauded investors of millions of dollars.
Music producer DJ Khaled and boxer Floyd Mayweather are facing a lawsuit due to their endorsement of the Centra Tech’s initial coin offering (ICO) that allegedly defrauded investors of millions of dollars.
Celebrities endorsed Centra to Millions of followers
According to news published by TMZ, DJ Khaled and Floyd Mayweather face a class action lawsuit resulting from their role as high-profile endorsers of the multi-million dollar crypto scam.
Both celebrities were on the forefront of trumping up support for the coin on social media, allegedly taking advantage of their massive influence and millions of fans to get people investing in the token sale.
At the time of the 2017 ICO, DJ Khaled (in a post that has since been deleted shown below) reached out to about 12 million Instagram fans and referred to the Centra ICO as a “game changer.”
In a September tweet, DJ Khaled touted Centra’s debit card and wallet app, writing on Instagram that Centra Card was the”ultimate winner in Cryptocurrency debit cards.”
Mayweather, then an undisputed boxing champion, advertised Centra Coin on Twitter and Instagram. He told about 8 million of his Twitter followers to “get” the token before missing out.
“Centra’s ICO starts in a few hours. Get yours before they sell out, I got mine.”
The U.S Securities and Exchange Commission (SEC) then issued a warning to celebrities from endorsing ICOs, saying that such actions could be liable for court action if deemed “unlawful.”
The SEC said at the time that ICO endorsements by celebrities could violate federal securities laws where those involved failed to disclose any arrangements regarding the nature, source, and amount of money paid as compensation.
Centra Tech – a crypto Scam
The class-action lawsuit follows on an earlier indictment where the founders Sohrab Sharma and Robert Farkas faced charges of committing securities fraud, wire fraud, and intentionally misleading investors.
The SEC accusation against the ICO team was that its promoters touted “nonexistent relationships” between the ICO and some well-known financial institutions. These actions were calculated towards hoodwinking the public.
While promoting Centra before the token sale, the founders had claimed partnerships were in place with both Visa and Mastercard, and that they would soon launch a crypto debit card.
Sharma had reportedly said at the time:
“Internationally we currently have our license with Mastercard to service international clients; domestically we have a Visa partnership, so we’re able to issue Visa cards domestically.”
Visa later refuted the claims, going on to issue a cease-and-desist letter to the startup’s founders.
In its filing, the SEC said that both Sharma and Farkas were “reckless” or “negligent,” essentially saying they knew there was no relationship between their ICO and either of Visa or Mastercard.
The Centra Tech team had even put up a fake front, appointing a non-existent CEO to lend the project more credibility. In June, a magistrate’s report that declared the CTR token was a securities token under federal laws.
Investors in the ICO filed a lawsuit against the crypto platform, claiming that Centra Tech had violated federal securities laws. The lawsuit sought compensation for the losses, which at the time was over $67 million.
The Centra Tech founders face a jail term for the fraud, while the lawsuit’s details indicate that investors want DJ Khaled and Floyd Mayweather to pay for damages.
Centra Tech refutes fraud charges in August blog post
In a post titled Dear Centra Community — Let the Truth be known, the author claims that the SEC’s charges were bogus:
“We allege, think, and/orbelieve that the comments from SEC Chief of Enforcement, Robert Cohen, regarding our technology are down right wrong. “
The author explains that Centra was, in fact, working with the SEC and intended to refund ICO investors. The company was ordered by the SEC that they couldn’t spend the funds raised during the ICO, which they claim they didn’t.
With regards to the false claims about fake contracts with credit card processors, the company explained:
“One processor who was supposed to issue our branded Visa cards domestically, and one processor that was going to issue our white-label MasterCard worldwide (the black cards that ICO contributors have gotten since Dec 2017..that actually worked unlike the false statements made). The processor we had to issue our branded US based Visa cards had told us since on or around August of 2017 we were “all good to go,” sent us contracts and term sheets, etc.”
We will keep monitoring the situation and the outcome of the class-action lawsuit against the two high-profile celebrities.