With the proliferation of bitcoin and cryptocurrencies into the world economy, an uncountable number of startups have taken advantage of the unregulated nature of the ICO ecosystem, and now ICOs, not IPOs are the new ways to raise capital for startups.
In recent times, there have been quite many ICO projects that have gone under with millions of investors’ funds without giving back a dime to its participants. Plexcoin, REcoin, DRC and possibly Centra are some examples of ICO projects that turned out to be nothing but well-advertised scam schemes.
Centra is a multi-blockchain cryptocurrency wallet linked with a debit card that allows its holders spend their bitcoin and altcoin from all over the world. Centra raised approximately $30 million during its Pre-sale and Crowdsale organized in July and September.
The Centra ICO project was promoted by quite a number of celebrities including boxing superstar; Floyd Mayweather. Back in July, the Centra ICO looked like a project meant for the skies, but it appears it got its wings broken somewhere along the line and now, investors have dragged Centra to the court.
Centra Goes To Court
As reported by Fortune, Centra has been dragged to court by some investors who took part in its ICO. Although Mayweather is not mentioned in the suit dated December 13, the founders of Centra Tech, Incorporated have been charged with allegations of making deceptive statements and selling unregistered securities. The lawsuit, which was filed in U.S district court in Florida, seeks a total refund of primary plaintiff Jacob Zowie Thomas Rensel and all other investors in the Centra ICO.
It is pertinent to note that in October, the New York Times reported that Centra’s claims of having established partnerships with Visa and Mastercard were nothing but lies. It was also claimed that the founders of the Centra Project were neither cryptocurrency or Blockchain technology experts nor credit card gurus and some have previously been accused of corrupt and fraudulent practices, financial negligence and drunk driving.
It also appears that Centra’s claim of Mayweather’s endorsement as being part of an ongoing business is false as the superstar boxer’s spokesman has since refuted the claim saying that Mayweather’s endorsement of Centra was just a one-off deal and that the fighter got paid in cash for it.
Celebrities like Mayweather and rapper DJ Khaled were only able to sponsor the Centra ICO project because the United States Securities and Exchange Commission (SEC) had not established its cyber crime department at that time. Mayweather also put his name to the Stoxx ICO during August 2017.
However, since the SEC’s cybercrime arm got into full action, wielding its strong hammer on fake ICO’s like Plexcoin, its operations have sounded a note of warning to entrepreneurs planning to organize fraudulent crowdfunding schemes. In November, the regulator also warned about celebrity endorsements for ICOs, stating endorsement by artists, musicians, actors or athletes, does not ensure the credibility of a purchase.