Crypto founder admits $25 million ICO backed by celebrities was a scam

The Miami-based cryptocurrency firm Centra Tech was built on fairy dust and paid celebrity hoo-ha, but co-founder Robert Joseph Farkas is going to be doing real time in a real prison for the $25 million initial coin offering (ICO) rip-off.

An ICO is an unregulated fundraising technique with a dodgy reputation that’s used by blockchain companies where cyptocurrencies like Bitcoin and Ethereum are used to purchase “tokens” from a startup. If the company takes off, they’ll theoretically be worth something. Centra Tech took off, all right, but only because its founders allegedly lied through their teeth.

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Farkas – also known as RJ – pled guilty in Manhattan federal court on Tuesday to charges of conspiring to commit securities and wire fraud, according to the US Attorney’s Office for the Southern District of New York.

Sentencing hasn’t been scheduled yet. Farkas, 33, pled guilty to two charges, each of which carries a maximum sentence of five years in prison. Maximum sentences are rarely handed out, but Farkas agreed to serve between 70 and 87 months and a fine of up to $250,000 in a plea deal.

From Miami Exotics car rentals to shilling celebrities

Centra Tech’s founders included Farkas, who held different roles, such as chief marketing officer and chief operating officer. Co-defendant/co-founder Sohrab Sharma was in turns chief technology officer and president. Before Centra, third co-defendant/co-founder Raymond Trapani ran a credit-fixing business and liked to post pictures of luxury cars and stacks of $20 bills on his Instagram account.