Co-Founder of Crypto Startup Centra Tech Pleads Guilty to $25M ICO Fraud

Robert Joseph Fracas, popularly known as FJ, co-founder of Centra Tech, has pled guilty for his involvement in securities and wire fraud worth $25 million. 

According to a Tuesday press release by the US Department of Justice, Fracas and his co-conspirators were accused of luring investors into purchasing $25 million worth of digital currency in an unregulated Initial Coin Offering (ICO) conducted in July 2017. 

The DOJ stated that the defendant and other members of the firm, Sohrab Sharma and Raymond Trapani, had established a cryptocurrency-related firm dubbed Centra Tech during the ICO boom of 2017.

The firm’s products include its digital token named Centra Token (CTR Token) and a debit card dubbed Centra Card, developed to allow users to make purchases using cryptocurrencies at any establishment that accepts Visa or Mastercard payment cards. 

While trying to lure investors into participating in its ICO, the firm claimed that its CEO, Michael Edwards has more than 20 years’ experience in the banking industry and that both Visa and Mastercard license its Centra Card. 

In addition, Centra Tech alleged that the company had a money transmitter and other licenses in 38 states, among other claims. 

These fictitious claims made investors purchase $25 million worth of CTR tokens, with the funds later increasing to the tune of $60 million in 2018 while the case was ongoing.  

American celebrities heavily fined for promoting ICO

In May 2018 and October 2018, respectively, the DOJ, in collaboration with the Federal Bureau of Investigation (FBI), obtained a confiscation warrant to seize 100,000 ETH and other forms of digital funds from the defendants based on fraudulent misrepresentations and omissions charges.  

In November 2018, the U.S Securities Exchanges Commission (SEC) heavily fined popular American music producer, DJ Khaled and former American professional boxer Floyd Mayweather for promoting Centra Tech. Both celebrities were asked to $152,725 and $614,775 respectively.

FJ, who pled guilty to one count of security fraud conspiracy and one count of wire fraud conspiracy, could spend ten years in prison, as each charge carries a maximum sentence of five years. 

Meanwhile, Coinfomania reported today that Russ Medlin, the unofficial executive of BitClub, one of the largest crypto Ponzi scheme, was arrested in Indonesia for different crimes but could be extradited to the United States, where he is allegedly wanted by the FBI for Bitcoin fraud.

NordFX