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Celebrity ICO Endorsers Face Legal Blowback Over Alleged Fraud

October 21, 2018 |

Celebrity ICO Endorsers Face Legal Blowback Over Alleged Fraud

Boxing superstar Floyd Mayweather and rap producer DJ Khaled face a legal battle for serving as celebrity endorsers to an initial coin offering (ICO) accused of fraud. The founders of the allegedly fraudulent ICO were arrested by American criminal authorities back in April.

Also Read: The Daily: Goldman Sachs Invests in Wallet, Institutional Traders Borrow $ 553M

ICO Promotion Blowback

Celebrity ICO Endorsers Face Legal Blowback Over Alleged FraudCelebrity gossip tabloid TMZ reports that Floyd Mayweather and DJ Khaled have been slapped with a lawsuit from investors who accuse them of participating in a multi-million dollar scam. The lawsuit revolves around the Centra Tech ICO that raised more than $ 32 million from thousands of investors last year, supposedly to build a suite of financial products including a cryptocurrency-backed debit card supported by Visa and Mastercard.

According to the class action lawsuit, Floyd and Khaled were influential in promoting the virtual currency on social media. The investors are targeting the celebrity endorsers, in addition to the company’s founders, with the aim of recouping their lost money plus damages. They complain that the value of the token crashed by over 98%, from about $ 1 per CTR in February to bellow $ 0.02 per token in April.

Founders Arrested

Celebrity ICO Endorsers Face Legal Blowback Over Alleged FraudIn early April we reported that the Securities and Exchange Commission (SEC) charged two co-founders of Centra Tech with orchestrating a fraud and criminal authorities arrested them both. Robert Farkas and Sohrah Sharma are alleged to have “masterminded a fraudulent ICO in which Centra offered and sold unregistered investments through a CTR Token.” The two are accused of lying about the relationships with Visa and Mastercard, creating fake biographies, and publishing false or misleading marketing materials to Centra’s website.

Later in April, the SEC charged a third co-founder, Raymond Trapani, with violating the anti-fraud and registration provisions of U.S. federal securities laws. The SEC released text messages between Farkas, Trapani and Sharma showing that, in response to a cease-and-desist letter from a bank demanding that Centra remove all references to it from their marketing materials, Sharma said “We gotta get that shit removed everywhere and blame freelancers lol.”

Should celebrity ICO endorsers be held to account for supporting these projects? Share your thoughts in the comments section below.


Images courtesy of Shutterstock.


Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from Bitcoin.com.

The post Celebrity ICO Endorsers Face Legal Blowback Over Alleged Fraud appeared first on Bitcoin News.

Bitcoin News

Massachuetts mayor charged with fraud to fund lavish lifestyle refuses to step down

October 17, 2018 |

An embattled Democratic mayor from Massachusetts who was arrested last week on suspicion of fraud and tax cheat charges is refusing to step down, calling his arrest “politically motivated” hours before city councilors pushed back a debate on how to handle the matter.
FOX News

NYT Probe: Trump Committed Fraud to Get Rich Off His Dad

October 3, 2018 |

President Trump, a self-made man? Not according to a New York Times report that he received at least $ 413 million in today’s dollars from father Fred Trump’s business empire, often by dodging taxes in the 1990s—and sometimes by committing flat-out fraud. Trump has long said his dad only lent…
Newser

SEC Sues Musk for Fraud, Seeks Exit From Tesla

September 28, 2018 |

Securities regulators sued Elon Musk for fraud and sought to remove him from Tesla, raising doubts about the future of an electric-car maker synonymous with the audacious entrepreneur.
WSJ.com: US Business

‘Unusually Sophisticated’ Credit Card Fraud Linked to Gangs

September 11, 2018 |

More than 30 purported street gang members have been charged with stealing more than $ 1 million in what authorities said Monday was an unusually sophisticated credit card fraud scheme. Members and associates of the BullyBoys and the CoCo Boys street gangs based in the suburbs east of San Francisco defrauded…
Newser

$1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

August 25, 2018 |

$  1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

The US Commodities Futures Trading Commission (CFTC) helped bring a fraud case to court, hoping to both assist in its ultimate prosecution and establish precedent. The New York Eastern District Court decided in the CFTC’s favor, ending in a combined over $ 1.1 million decision in fines and restitution. It also established the regulator as having jurisdiction over cryptocurrencies. 

Also read: China Continues Crackdown: No Hotels, Malls, Offices Used as Crypto Venues

CFTC Wins Precedent Setting Case to Regulate Crypto

It’s rare a legal case accomplishes two firsts. In the proceedings taken against Patrick K. McDonnell, Cabbage Tech, and Coin Drop Markets, the New York Eastern District Court decided to not only rule against the defendant, but also wound up establishing standing for US regulator Commodities Futures Trading Commission (CFTC).

$  1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

Until the decision handed down on August 23rd, 2018 in a 139-page Memorandum, it was assumed the Securities and Exchange Commission (SEC) would be the lone regulator when it came to cryptocurrencies in the US. As a result, part of the case involved the CFTC arguing for its jurisdiction when it came to crypto scams in general.

In what amounts to a permanent injunction, the defendant was ordered to pay more than a quarter million dollars in victim restitution along with a fine of more than $ 800,000, bringing the grand total to more than $ 1.1 million.

Politically Motivated?

It was alleged during the first six months of 2017, the defendants fraudulently lured victims into believing they were purchasing and trading under the expert advice of Mr. McDonnell and Cabbage Tech. Evidently, Mr. McDonnell was listed as Chief Technology Officer, insisting he and Cabbage Tech had offices in places such as Wall Street, among other falsehoods about the company’s infrastructure, prosecutors claim.

$  1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction
Investigations revealed the company was a one man enterprise operated from Mr. McDonnell’s home. By summer of last year, the company’s website posted about being hacked, and declared it would suspend all activity. Not long after, the website and its chatroom, along with social media accounts, had been shuttered. Customers were left to wonder. By the beginning of this year, the CFTC charged defendants with “a deceptive and fraudulent virtual currency scheme for purported virtual currency trading advice; for virtual currency purchases and trading misappropriated [investor] funds.”

Though the CFTC prevailed, Mr. McDonnell maintained he was the subject of a political prosecution. As he explained to news.Bitcoin.com just a few months ago, he believed the “CFTC was grandstanding in Washington just weeks later of the complaint asking for a budget increase and pointing at their most recent ‘cryptocurrency’ enforcement. Much of this will come to light throughout the trial and you will see the CFTC was reckless in an attempt to force regulation. They needed something to point at,” Mr. McDonnell complained.

Is having the SEC and now the CFTC going after crypto scams a good thing? Share your thoughts in the comments section below.


Images via Pixabay.


Be sure to check out the podcast, Blockchain 2025; latest episode here. Want to create your own secure cold storage paper wallet? Check our tools section.

The post $ 1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction appeared first on Bitcoin News.

Bitcoin News

Paul Manafort Convicted of Eight Counts of Fraud

August 22, 2018 |

The former Trump campaign chairman was convicted of eight charges related to tax and bank fraud, in the first trial to stem from Special Counsel Robert Mueller’s investigation.
WSJ.com: What’s News Asia

Martin Shkreli’s company lawyer sentenced to 18 months for aiding fraud

August 18, 2018 |

Martin Shkreli’s cohort in crime may be an Eagle Scout who has devoted his life to serving others, but that didn’t save Evan Greebel from a prison sentence for aiding the “Pharma Bro” in an $ 11-million fraud.

Greebel was ordered Friday to serve 18 months behind bars for conspiring with Shkreli,…


L.A. Times – Business

Defunct for-profit college firm ITT’s former executives settle fraud charges

July 11, 2018 |

Former top executives at ITT Educational Services, the parent company of defunct ITT Technical Institute, have settled fraud charges with the Securities and Exchange Commission, avoiding a trial that was slated to begin Monday.

A judgment order entered Friday puts to rest civil fraud charges filed…


L.A. Times – Business

Ripple, CEO Face Another Securities Fraud Lawsuit

July 5, 2018 |

Ripple, CEO Face Another Securities Fraud Lawsuit

A third lawsuit, alleging securities fraud, was filed last week against Ripple Labs Inc, XRPII LLC, and its CEO Bradley Glaringhouse. In 28 pages, the class action suit attempts to make the case XRP is a security: issued, maintained, and supported by Ripple in clear violation of US regulatory laws. Ripple has worked extremely hard to distance itself from its cryptocurrency, XRP, in hopes of avoiding just this scenario.   

Also read: Troll Slayer: Derek Magill Defends Peer-to-Peer Electronic Cash Against Defamation

Ripple Labs Faces Third Securities Fraud Lawsuit

Managing partner of Robbins Arroyo LLP, Brian J. Robbins, filed a class action lawsuit against Ripple Labs Inc, XRPII LLC, and CEO Bradley Glaringhouse on behalf of San Diego college senior David Oconer. Signed by fax late June of this year in the San Mateo, California Superior Court, its more than two dozen pages set about making the case Ripple is in clear violation of the Howey Test.

Mr. Oconer, through his legal team, stresses how Ripple fought to manipulate the XRP price, including placing tens of millions XRP tokens into a kind of escrow, creating an arbitrary scarcity. It was also a way to signal to worried longer term investors the company would not dump the lot all at once. Indeed, XRP mooned to many hundreds of percent, the suit alleges, as a result of such moves.

Ripple, CEO Face Another Securities Fraud Lawsuit

It’s the third such lawsuit filed against the company since early May of this year. A common theme between each suit is the claim XRP is a security as defined under US regulatory statute – which insist Ripple Labs is the token’s puppet master indistinguishable from XRP itself. The Oconer version leans heavy on making a case for a Howey Test violation. Ripple isn’t taking any of the suits lightly, hiring two former US Securities and Exchange Commission heavies, Andrew Ceresney and Mary Jo White, as lead counsel.

Ripple, CEO Face Another Securities Fraud Lawsuit

XRP has long been held in a controversial light due in part to its origin story. While leading cryptos were to be mined on chain, ripples appeared ex nihilo with more than 60 percent still held by its parent company. If deemed a security, the company would be most likely ordered to cease all trading, and it’s not unusual to presume holders would be given the chance at refunds. Violations of securities law, what’s more, can also be prosecuted criminally, though those in the know believe it will not get to that stage.

Will these lawsuits hurt Ripple? Let us know in the comments section below. 


Images via the Pixabay, Twitter.


Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi Pulse, another original and free service from Bitcoin.com.

The post Ripple, CEO Face Another Securities Fraud Lawsuit appeared first on Bitcoin News.

Bitcoin News