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Cryptocurrency scam: Indian-origin man indicted in $60mn fraud in NY

Anjana Raghav


Cryptocurrency scam: Indian-origin man indicted in $60mn fraud in NY

15 May 2018: Cryptocurrency scam: Indian-origin man indicted in $60mn fraud in NY

Three co-founders, including an Indian-origin man, of a start-up cryptocurrency company named "Centra Tech", have been indicted with a scheme to defraud investors in New York.

The accused induced victims to invest millions of dollars' worth of digital funds for the purchase of unregistered securities, in the form of digital currency tokens issued by Centra.

Authorities seized digital currency worth over $60mn from victims.

Fact: Who were the co-founders?

Co-founders of the Centra Tech are Sohrab Sharma, a 27-year-old Indian-origin man, Raymond Trapani (27) and Robert Farkas (31). All three are the residents of Florida. All three of them are charged in a four-count indictment that in all carry 65 years in prison.

False claims: False claims: Centra had partnerships with Bancorp, Visa, MasterCard

To defraud potential investors, the accused claimed that Centra Tech had formed partnerships with Bancorp, Visa, and MasterCard to issue Centra Cards licensed by Visa/MasterCard.

They also said Centra Tech had money transmitter and other licenses in 38 states.

In October 2017, the digital funds raised from victims were worth more than $25mn.

But, Centra Tech had no such partnerships with Bancorp/Visa/MasterCard.

Fact: What is cryptocurrency?

Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of the currency and verify the transfer of funds, operating independently of a central bank.

Seized: FBI seized 91,000 Ether units following the accused's arrests

The three men were arrested last month. Following their arrests, the Federal Bureau of Investigation seized 91,000 Ether units, consisting of digital funds (over $60mn) raised from victims as part of the charged scheme.

"They allegedly made false claims about their relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO," said Attorney for the United States Robert Khuzami.